57854 Federal Register / Vol. 73, No. 193 / Friday, October 3, 2008 / Rules and Regulations 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

42 CFR Part 441 

[CMS–2229–F] 

RIN 0938–AO52 

Medicaid Program; Self-Directed 

Personal Assistance Services Program 

State Plan Option (Cash and 

Counseling) 

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), HHS. 

ACTION: Final rule. 

SUMMARY: This final rule provides 

guidance to States that want to 

administer self-directed personal 

assistance services through their State 

Plans, as authorized by the Deficit 

Reduction Act of 2005. The State plan 

option allows beneficiaries, through an 

approved self-directed services plan and 

budget, to purchase personal assistance 

services. The rule also provides 

guidance to ensure beneficiary health 

and welfare and financial accountability 

of the State Plan option. 

DATES: Effective date: November 3, 

2008. 

FOR FURTHER INFORMATION CONTACT: 

Marguerite Schervish, (410) 786–7200. 

SUPPLEMENTARY INFORMATION: 

I. Background 

A. Section 6087 of the Deficit Reduction 

Act of 2005 

The Deficit Reduction Act (DRA) of 

2005 was enacted into law on February 

8, 2006 (Pub. L. 109–171). Section 6087 

of the DRA provided for a new State 

Plan option that is built on the 

experiences and lessons learned from 

the disability rights movement and 

States that pioneered self-direction 

programs. Self-direction is an important 

component of independence, as it 

promotes quality, access, and choice. 

Specifically, section 6087 of the DRA 

amended section 1915 of the Social 

Security Act (the Act) to add new 

paragraph (j). Section 1915(j)(1) of the 

Act would allow a State the option to 

provide, as ‘‘medical assistance,’’ 

payment for part or all of the cost of 

self-directed personal assistance 

services (PAS) provided pursuant to a 

written plan of care to individuals for 

whom there has been a determination 

that, but for the provision of such 

services, the individuals would require 

and receive State Plan personal care 

services, or section 1915(c) home and 

community-based waiver services. 

Section 1915(j)(1) of the Act also 

expressly excludes Medicaid payment 

for room and board. Finally, section 

1915(j)(1) of the Act requires that selfdirected PAS may not be provided to 

individuals who reside in a home or 

property that is owned, operated, or 

controlled by a provider of services, not 

related by blood or marriage. 

Section 1915(j)(2) of the Act sets forth 

five assurances that States must provide 

in order for the Secretary to approve 

self-directed PAS under this State Plan 

option. First, States must assure that 

necessary safeguards are in place to 

protect the health and welfare of 

individuals provided services under this 

State Plan option, and to assure the 

financial accountability for funds 

expended with respect to such services. 

Second, States must assure the 

provision of an evaluation of the need 

for State Plan personal care services, or 

personal services under a section 

1915(c) waiver. Third, States must 

assure that individuals who are likely to 

require State Plan personal care 

services, or section 1915(c) waiver 

services, are informed of the feasible 

alternatives to the self-directed PAS 

State Plan option (if available) such as 

personal care under the regular State 

Plan option or personal assistance 

services under a section 1915(c) waiver 

program. Fourth, States must assure that 

they provide a support system that 

ensures that participants in the selfdirected PAS program are appropriately 

assessed and counseled prior to 

enrollment and are able to manage their 

budgets. Fifth, States must assure that 

they will provide to the Secretary an 

annual report on the number of 

individuals served under the State Plan 

option and the total expenditures on 

their behalf in the aggregate. States must 

also provide an evaluation of the overall 

impact of this new option on the health 

and welfare of participating individuals 

compared to non-participants every 3 

years. 

Section 1915(j)(3) of the Act indicates 

that States that offer self-directed PAS 

under this State Plan option are not 

subject to the statewideness and 

comparability requirements of the Act. 

Section 1915(j)(4)(A) of the Act defines 

self-directed PAS to mean personal care 

and related services under the State 

Plan, or home and community-based 

waiver services under a section 1915(c) 

waiver, provided to a participant 

eligible under this self-directed PAS 

State Plan option. Furthermore, the 

statute states that within an approved 

self-directed services plan and budget, 

individuals can purchase personal 

assistance and related services and hire, 

fire, supervise, and manage the 

individuals providing such services. 

Section 1915(j)(4)(B) of the Act gives 

States the option to permit participants 

to hire any individual capable of 

providing the assigned tasks, including 

legally liable relatives, as paid providers 

of the services. The statute also gives 

States the option to permit participants 

to purchase items that increase 

independence or substitute for human 

assistance to the extent that 

expenditures would otherwise be made 

for the human assistance. 

Section 1915(j)(5) of the Act sets forth 

the requirements for an ‘‘approved selfdirected services plan and budget.’’ 

Section 1915(j)(5)(A) of the Act 

authorizes the individual or a defined 

representative to exercise choice and 

control over the budget, planning, and 

purchase of self-directed PAS, including 

the amount, duration, scope, provider, 

and location of service provision. 

Section 1915(j)(5)(B) of the Act requires 

an assessment of participants’ needs, 

strengths, and preferences for PAS. 

Section 1915(j)(5)(C) of the Act requires 

States to develop a service plan based 

on the assessment of need using a 

person-centered planning process. 

Section 1915(j)(5)(D) of the Act requires 

States to develop and approve a budget 

for participants’ services and supports 

based on the assessment of need and 

service plan and on a methodology that 

uses valid, reliable cost data, is open to 

public inspection, and includes a 

calculation of the expected cost of such 

services if those services were not selfdirected. The budget may not restrict 

access to other medically necessary care 

and services furnished under the State 

Plan and approved by the State but not 

included in the budget. 

Section 1915(j)(5)(E) of the Act 

requires that there are appropriate 

quality assurance and risk management 

techniques used in establishing and 

implementing the service plan and 

budget that recognize the roles and 

responsibilities in obtaining services in 

a self-directed manner and assure the 

appropriateness of such plan and budget 

based upon the participant’s resources 

and capabilities. 

Section 1915(j)(6) of the Act indicates 

that States may employ a financial 

management entity to make payments to 

providers, track costs, and make reports. 

Payment for the activities of the 

financial management entity shall be at 

the administrative rate established in 

section 1903(a) of the Act. 

Note: CMS released a pre-print for use by 

States, at their discretion, to submit a State 

plan section 1915(j) amendment, which was 

approved under OMB #0938–1024. 


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B. History of Self-Direction 

The Independent Living movement in 

the 1960s was premised on the concept 

that people with disabilities should 

have the same civil rights, options, and 

control over choices in their own lives 

as do people without disabilities, and 

that individuals with cognitive 

impairments should not be prohibited 

from exercising control over their lives. 

One mechanism that allows individuals 

to exercise more involvement, control, 

and choice over their lives is selfdirected care. Self-directed care is a 

service delivery mechanism that 

empowers individuals with the 

opportunity to select, direct, and 

manage their needed services and 

supports identified in an individualized 

service plan and budget plan. Selfdirection is not a service, but rather an 

alternative to the traditional service 

delivery model whereby a worker hired 

by the Medicaid recipient will furnish 

the Medicaid service to the Medicaid 

recipient and the Medicaid recipient 

retains the control and authority over 

who provides the services, how the 

services are provided, the hours they 

work, and their rate of pay. 

Two national pilot projects 

demonstrated the success of selfdirected care. During the mid-1990s, the 

Robert Wood Johnson Foundation 

awarded grants to develop selfdetermination in 19 States. These 

projects primarily evolved into 

Medicaid-funded programs under the 

section 1915(c) home and communitybased services waiver authority. In the 

late 1990s, the Robert Wood Johnson 

Foundation again awarded grants to 

develop the ‘‘Cash & Counseling’’ 

national demonstration and evaluation 

project in three States. These projects 

evolved into demonstration programs 

under the section 1115 authority of the 

Act. 

Evaluations were conducted in both 

of these national projects. Results in 

both projects were similar—persons 

directing their personal care 

experienced fewer unnecessary 

institutional placements, experienced 

higher levels of satisfaction, had fewer 

unmet needs, experienced higher 

continuity of care because of less worker 

turnover, and maximized the efficient 

use of community services and 

supports. 

On February 1, 2001, the President 

announced the New Freedom Initiative, 

which included the following three 

elements: promoting full access to 

community life through efforts to 

implement the Supreme Court’s 

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

581 (1999) (‘‘Olmstead’’), integrating 

Americans with disabilities into the 

workforce with programs under the 

Ticket to Work and Work Incentives 

Improvement Act of 1999 (TWWIIA) 

(Pub. L. 106–170, enacted on December 

19, 1999), and creating the National 

Commission on Mental Health. The 

President subsequently expanded this 

initiative through Executive Order 

13217 (June 18, 2001) by directing 

Federal agencies to work together to 

‘‘tear down the barriers’’ to community 

living by developing a government-wide 

framework for providing elders and 

people with disabilities the supports 

necessary to learn and develop skills, 

engage in productive work, choose 

where to live, and fully participate in 

community life. 

On May 9, 2002, as part of its 

response to the New Freedom Initiative, 

the Department of Health and Human 

Services unveiled the Independence 

Plus templates and the initiative to help 

States broaden their ability to offer 

individuals the opportunity to 

maximize choice and control over 

services in their own homes and 

communities. The Department 

developed two templates that allowed 

States to choose different self-directed 

design features to satisfy their unique 

programs. The section 1115 

demonstration template was developed 

for States that wanted to permit 

individuals to receive a prospective 

cash allowance equivalent to the 

amount of their Medicaid personal care 

benefit. Under the section 1115 

authority, individuals could directly 

manage their cash allowance and direct 

the purchases of their personal care and 

related services and goods. For those 

States not wanting to offer the cash 

allowance, a section 1915(c) home and 

community-based services waiver 

template was developed. The section 

1915(c) waiver template allowed 

Medicaid recipients to self-direct a wide 

array of services, so long as these 

services are required to keep a person 

from being institutionalized in a 

hospital, nursing facility or intermediate 

care facility for the mentally retarded 

(ICF–MR). 

However, a program was only given 

the Independence Plus designation 

when a State demonstrated a strong 

commitment to self-direction by 

developing a comprehensive program 

that offered a person-centered planning 

process, individualized budgeting, selfdirected supports including financial 

management services, and a quality 

assurance and improvement plan. The 

intended purposes of the Independence 

Plus Initiative were to: 

• Delay or avoid institutional or other 

high cost out-of-home placement by 

strengthening supports to individuals or 

families. 

• Recognize the essential role of the 

individual or family in the planning and 

purchasing of health care supports and 

services by providing individual or 

family control over an agreed upon 

resource amount. 

• Encourage cost effective decisionmaking in the purchase of supports and 

services. 

• Increase individual or family 

satisfaction through the promotion of 

self-direction, control, and choice—a 

major theme expressed during the New 

Freedom Initiative—National Listening 

Session. 

• Promote solutions to the problem of 

worker availability. 

• Provide supports including 

financial management services to 

support and sustain individuals or 

families as they direct their own 

services. 

• Assist States with meeting their 

legal obligations under the Americans 

with Disabilities Act (ADA) and the U.S. 

Supreme Court’s Olmstead decision. 

• Provide flexibility for States seeking 

to increase the opportunities afforded 

individuals and families in deciding 

how best to enlist or sustain home and 

community services. 

A new section 1915(c) waiver 

application was also developed effective 

spring 2005 that incorporates our 

requirements for an Independence Plus 

program. 

In 2003 we awarded 12 systems 

change grants to States for the 

development of Independence Plus 

programs. On October 7, 2004, the 

Robert Wood Johnson Foundation 

awarded a second round of ‘‘Cash & 

Counseling’’ grants to 11 States to 

develop Independence Plus programs 

using either the section 1915(c) waiver 

or section 1115 demonstration 

application. As of March 20, 2006, 15 

States had 17 approved Independence 

Plus programs. In addition, there were 2 

other States that included self-direction 

options in their section 1115 

demonstrations and a multitude of 

States that offered self-directed program 

options in their section 1915(c) home 

and community-based services waiver 

programs. 

This final rule finalizes provisions set 

forth in the January 18, 2008 proposed 

rule. 

II. Analysis of and Responses to Public 

Comments on the Proposed Rule 

We received a total of 55 timely 

comments from home care agencies and 

provider associations, State Medicaid 

directors, home care providers, unions, 

beneficiaries, and other individuals and 


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professional associations. The 

comments ranged from general support 

or opposition to the proposed 

provisions to very specific questions 

and detailed comments regarding the 

proposed changes. A summary of our 

proposals, the public comments, and 

our responses are set forth below. 

General 

Comment: Several commenters 

expressed support for the rule and the 

options, rights, support, and safeguards 

the provisions gave to participants. One 

commenter was appreciative of the 

possibility to be able to hire a caregiver 

of her own choosing. Another 

commenter stated that her ‘‘hard to 

serve’’ clients were satisfied with hiring 

persons of their choosing and that 

another client was able to get more 

hours of ‘‘flexible’’ care to fit her 

individualized needs and wishes. 

Response: We appreciate the 

perspectives these commenters had in 

support of the rule. 

Comment: Several commenters 

indicated opposition to the self-directed 

service delivery model. Some 

commenters stated that the model was 

not appropriate for most Medicaid 

beneficiaries. Other commenters were 

concerned that under the self-directed 

delivery model, caregivers were 

inadequately trained, that there was 

insufficient oversight of the care being 

provided beneficiaries, and that the 

potential for fraud, abuse, neglect, and 

exploitation increased. 

Response: We disagree that the selfdirected service delivery model is an 

inappropriate model. Our experience 

with programs that offer self-direction 

in section 1915(c), home and 

community-based services waiver 

programs and section 1115 

demonstration programs, has confirmed 

the positive results found in the formal 

evaluation of the ‘‘Self-Determination’’ 

and ‘‘Cash & Counseling’’ projects. 

These programs successfully offered the 

self-directed service delivery model to 

children, older persons, and persons 

with cognitive impairments, 

developmental disabilities, and mental 

health needs. This final rule requires 

numerous participant safeguards, 

including the requirement for a support 

system that provides information about 

self-direction, as well as any counseling, 

training and assistance that may be 

needed or desired by participants to 

effectively manage their services and 

budgets. Key components of the support 

system are the support brokers and 

consultants who help participants 

perform tasks (for example, locating and 

accessing needed services, developing a 

service budget plan, and monitoring the 

beneficiary’s management of the PAS 

and budget). Additionally, the support 

system includes financial management 

services entities that perform, or assist 

participant beneficiaries who have 

elected the cash option to perform, the 

employer-related and tax 

responsibilities. States may also add 

other activities that they deem necessary 

or appropriate in their support systems. 

Other participant protections include 

requirements for an assessment of the 

individual’s needs, strengths, and 

preferences for self-directed PAS; the 

use of a representative when needed; a 

person-centered planning process that 

engages the individual and also involves 

the individual’s family, friends, and 

professionals in the planning or delivery 

of services or supports; a quality 

assurance and improvement plan; and 

individualized backup plans that 

address critical contingencies or 

incidents that would pose a risk of harm 

to the participant’s health and welfare. 

We also require that States have in place 

a risk management system that 

identifies potential risks to the 

participant and employs tools or 

instruments (for example, criminal and 

worker background checks) to mitigate 

risks. The statute and this final rule 

further require States to assure that 

necessary safeguards have been taken to 

protect the health and welfare of 

individuals furnished services under 

this program and to assure financial 

accountability for the funds expended 

for self-directed services. 

Comment: Some commenters 

requested clarification about the impact 

of funds paid to legally liable relatives, 

including a parent-caregiver, on the 

individual’s or family’s resources for 

other public benefit programs. The 

commenters urged that CMS work with 

other Federal partners to ensure that the 

receipt of cash would not jeopardize 

other public benefit programs and that 

we work to enact needed changes 

through legislation. 

Response: The scope of this regulation 

does not extend to the impact of funds 

paid to legally liable relatives on their 

receipt of public benefits. However, we 

will take under advisement the 

suggestion of working with other 

agencies to address the impact of the 

cash option on the receipt of other 

public benefits. 

Comment: One commenter sought 

clarification on whether CMS will 

require a State that has already 

implemented elements of self-direction 

under its State plan and waivers to 

modify these existing programs or 

submit a State plan amendment in 

compliance with the new rule. This 

same commenter sought clarification on 

whether the section 1915(j) option 

would be the exclusive authority for 

self-directed services or whether States 

may pursue or rely on other Medicaid 

authorities. 

Response: We have not required and 

do not intend to require any State to 

submit a section 1915(j) State plan 

amendment, nor is the section 1915(j) 

opportunity the exclusive opportunity 

for a State to pursue the self-directed 

service delivery model. States are free to 

use some, all, or none of the appropriate 

Medicaid authorities that are available 

for use of the self-directed service 

delivery model. 

Comment: One commenter requested 

clarification on the impact of the rule on 

a participant’s eligibility for selfdirected PAS, generally focusing on the 

interaction with a section 1915(c) 

waiver program. The commenter 

requested clarification on the following: 

(1) Whether a participant may receive 

a budget for self-directed PAS and 

concurrently receive waiver services, or 

whether States may limit or deny access 

to waiver services. 

(2) Whether waiver recipients who 

elect the self-directed PAS service 

option are considered enrolled in the 

waiver, and whether waiver ‘‘slots’’ 

must be set aside for persons who may 

disenroll from the option. 

(3) Whether CMS intends to allow 

States to cover services beyond personal 

care and items that increase 

independence or substitute for human 

assistance. 

(4) Whether individuals who are 

eligible for section 1915(c) waiver 

services under the special income group 

may be eligible for the self-directed PAS 

State plan option. 

(5) Whether the individual would 

have to maintain enrollment in a waiver 

and what threshold is required to 

maintain that enrollment (for example, 

meeting the level of care criteria, having 

a plan of care, or receiving a waiver 

service on a periodic basis). 

Response: Our response follows the 

order of the commenter’s questions as 

noted above. 

(1) It is permissible for an individual 

to participate in the self-directed PAS 

State plan option and concurrently 

receive services under a section 1915(c) 

waiver program as a State can select 

which of the section 1915(c) waiver 

services participants will have the 

opportunity to self-direct. It is not 

permissible to limit or deny a 

participant the other section 1915(c) 

waiver services for which the 

participant is eligible but not selfdirecting. Specifically, 42 CFR 

441.472(d) requires that the ‘‘budget 

may not restrict access to other 


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medically-necessary care and services 

furnished under the plan and approved 

by the State but not included in the 

budget.’’ 

(2) Participants who elect the selfdirected PAS State plan option may 

remain ‘‘enrolled’’ in their section 

1915(c) waiver program and their socalled ‘‘slots’’ must be kept available in 

the event the participant voluntarily 

disenrolls or is involuntarily disenrolled 

from the self-directed PAS State plan 

option. 

(3) When a State offers the 

opportunity to self-direct State plan 

personal care services (PCS), we do not 

believe it would be permissible for 

participants to purchase services that 

are not included within the State’s 

definition of its PCS benefit. However, 

we recognize that both the statute and 

regulation at § 441.470(d) allow a State, 

at the State’s election, to offer 

participants the opportunity to reserve 

funds to purchase items that increase 

independence or substitute for human 

assistance, to the extent that 

expenditures would otherwise be made 

for human assistance, including 

additional goods, supports, services, or 

supplies. We intend to issue further 

guidance on the criteria for permissible 

purchases to assist States in deciding 

the scope of the permissible purchases 

in their self-direction programs. We 

believe that, at a minimum, the 

permissible purchase must relate to a 

need or goal identified in the service 

plan. 

(4) Individuals who are eligible for 

section 1915(c) home and communitybased waiver services under the special 

income group may be eligible for the 

self-directed PAS State plan option. 

(5) A participant would have to 

maintain all eligibility, level of care, and 

other requirements for the section 

1915(c) waiver program. If, upon 

reassessment, a participant would no 

longer be eligible for the section 1915(c) 

waiver services through which the 

participant was able to self-direct their 

PAS, then the participant would no 

longer be able to self-direct their PAS 

under this State plan option. 

Comment: Some commenters stated 

that they believe that the self-directed 

service delivery model would reduce 

the viability of agencies that deliver 

traditional agency-delivered services 

especially in rural or difficult to serve 

areas, would force individuals into a 

more expensive option, such as a skilled 

nursing facility (SNF) or hospital, and 

would delay hospital discharges and 

would force more agencies to only serve 

private pay clients. 

Response: The evaluations conducted 

on the ‘‘Self-Determination’’ and the 

‘‘Cash & Counseling’’ national projects 

have provided evidence of consumer 

satisfaction and quality of care. In 

addition, our experience with the 

section 1115 demonstration and section 

1915(c) waiver programs has not shown 

this impact on traditional agencydelivered services. Therefore, we do not 

believe that the consequences noted in 

the comments regarding the selfdirected service delivery model are 

necessarily predicted outcomes. 

Comment: One commenter disagreed 

that the self-directed service delivery 

model costs less than traditional agencydelivered services. 

Response: We have not asserted that 

the self-directed PAS State plan option 

costs less than the traditional agencydelivered service model. Two national 

pilot projects demonstrated the success 

of the self-directed service delivery 

model. The ‘‘Self-Determination’’ and 

the ‘‘Cash & Counseling’’ national 

projects were evaluated in a 

scientifically designed study. The 

evaluation results of those projects were 

similar and concluded that persons 

directing their personal care 

experienced fewer unnecessary 

institutional placements; experienced 

higher levels of satisfaction; had fewer 

unmet needs; experienced higher 

continuity of care because of less worker 

turnover; and maximized the efficient 

use of community services and 

supports. The results did not necessarily 

confirm that self-directed care costs less. 

For example, the results in the ‘‘Cash & 

Counseling’’ States indicated that 

Medicaid personal care costs were 

somewhat higher under ‘‘Cash & 

Counseling’’, mainly because enrollees 

received more of the care they were 

authorized to receive, as compared to 

the services delivered under the 

traditional agency model. Another 

finding was that increased Medicaid 

personal care costs under ‘‘Cash & 

Counseling’’ were partially offset by 

savings in institutional and other longterm-care costs. Furthermore, the 

findings also suggested that ‘‘Cash & 

Counseling’’ need not cost more than 

traditional programs if states carefully 

design and monitor their programs. For 

example, States could design their 

‘‘Cash & Counseling’’ programs so that 

the cost per month is budgeted to match 

the cost per month of its traditional 

system, assuming that home care 

agencies will fully meet their care 

obligations. If the traditional system 

delivers the services beneficiaries are 

authorized to receive, there should be 

no difference in planned costs. 

Comment: Two commenters 

expressed concern that the proposed 

rule added too many additional 

administrative requirements that would 

be burdensome or costly to States. One 

commenter thought that the rule would 

eliminate the efficiencies intended by 

the Congress. 

Response: We acknowledge that 

States that have not yet developed the 

infrastructure necessary to support the 

self-directed service delivery model, in 

particular developing a support system, 

may experience higher initial 

administrative burdens and costs when 

designing their self-directed PAS 

programs. Regardless of whether a State 

uses its self-directed PAS State plan 

option, a section 1915(c) home and 

community-based services waiver 

option, or a section 1915(i) home and 

community-based services State plan 

option to offer the self-directed service 

delivery model, there will be 

administrative and support system 

requirements, and State Medicaid 

agencies must exercise administrative 

and oversight functions over their 

Medicaid programs. 

Basis, Scope & Definitions (§ 441.450) 

We proposed to implement section 

1915(j) of the Social Security Act (the 

Act) concerning the self-directed PAS 

option through a State plan. We 

proposed that individuals who selfdirect their PAS under this option have 

the decision-making authority to 

identify, access, manage, and purchase 

their PAS including a proposed list of 

minimum activities over which the 

individuals may exercise decisionmaking authority. We proposed several 

definitions specific to the self-directed 

PAS State plan option. 

Comment: One commenter 

recommended that CMS add a reference 

to ‘‘or their representative(s)’’ whenever 

the rule refers to individuals or 

participants. 

Response: We agree with the 

comment because the use of a 

representative to assist the individual or 

participant in exercising their decisionmaking authority is consistent with the 

self-directed service delivery model. 

Accordingly, we have revised the part 

441, subpart J in relevant places by 

adding ‘‘or their representatives’’ when 

we refer to ‘‘individuals’’ or 

‘‘participants.’’ 

Comment: A few commenters 

suggested that CMS add ‘‘training’’ of 

the PAS providers to the list of items 

subject to the participant’s authority in 

§ 441.450(b) and that participants have 

access to training provided by or 

through the State. 

Response: We agree with the 

comment about adding ‘‘training’’ to the 

list of items subject to the participant’s 

authority because the ability of a 


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participant to train the provider of their 

PAS in the participant’s needs and in a 

manner that comports with the 

participant’s preferences is crucial to 

the self-directed service delivery model. 

Accordingly, we have revised the 

authority provision at § 441.450(b)(4) to 

expressly include the ability of the 

participant to train their workers. We 

also believe that there are circumstances 

in which participants may desire that 

their PAS providers secure additional 

training beyond what the participants 

can provide. Accordingly, we have 

further revised the authority provision 

at § 441.450(b)(4) to permit participants 

to have access to other training provided 

by or through the State so that their PAS 

providers can meet any additional 

qualifications that participants think 

their providers may need. 

Comment: Some commenters thought 

that § 441.450(b) should be revised to 

include the ability of the participant to 

select his or her own financial 

management services (FMS) entity and 

his or her own supports brokers or 

consultant. 

Response: We believe that the services 

of the FMS entities are administrative 

functions and that States have the 

authority to determine whether or not to 

limit the FMS entities that will provide 

the FMS functions. We believe that the 

functions of a supports broker or 

consultant comprise a service that is 

unique to this State plan option and, as 

such, recognize that States would want 

to be able to claim Federal medical 

assistance percentages (FMAP) for this 

service. The supports broker or 

consultant performs a variety of key 

functions that include the provision of 

information, counseling, training and 

assistance, or helping participants 

access needed information, counseling, 

training and assistance to help 

participants effectively manage their 

PAS. Typically, they may assist 

participants in locating and accessing 

needed services, developing service 

budget plans and helping participants to 

fulfill their roles and responsibilities as 

an employer. Based on our experience 

with self-direction programs under 

section 1115 demonstrations or section 

1915(c) waiver programs, we have 

learned that participants desired the 

opportunity to select a different 

supports broker or consultant if the 

relationship between an assigned 

supports broker or consultant and the 

participant was not satisfactory. We 

have revised the rule at § 441.450(c) to 

add a definition for ‘‘supports broker’’ 

or ‘‘consultant.’’ Further detail on the 

definition is provided in response to 

another comment. 

Comment: Some commenters 

expressed disagreement with the 

requirement that participants are 

allowed to determine the amount paid 

for a service, support, or item stating 

that a State law or collective bargaining 

agreement could conflict with this 

authority. One commenter thought that 

this requirement was inconsistent with 

the statutory language and congressional 

intent and would deprive States of their 

‘‘traditional wage standard-setting role.’’ 

Another commenter asked for 

clarification on how the requirement 

comports with State plan rate-setting 

requirements, including the requirement 

that there must be public notice of any 

significant proposed change in methods 

and standards for setting payment rates. 

Response: We believe that the 

statutory authority contemplates 

including participants in the decisionmaking authority over the amount paid 

for a service, support or item. We 

believe that only a few States have 

actually set the precise wages for 

participants of self-direction programs. 

Indeed, we believe that most States 

reimburse varying amounts even for 

services provided by traditional service 

models. We further note that the 

requirement for public notice applies to 

rates paid by the Medicaid agency for 

services. In the case of self-directed 

services, it would be the budget amount 

upon which Medicaid reimbursement 

would be based. The rate that the 

participant pays their provider of PAS 

from the available budgeted amount is 

outside the scope of the requirement for 

public notice of Medicaid rate setting. 

Comment: One commenter was 

confused about the apparent multiple 

meanings for the word ‘‘support’’ or 

‘‘supports.’’ The commenter suggested 

that we amend the rule to clarify that 

the State has the discretion to limit 

supports that are beyond the State’s 

obligation, such as repeated counseling, 

training, and assistance sessions. 

Response: To clarify, in the context of 

self-directed PAS, ‘‘supports’’ generally 

means a service or item that a 

participant can purchase and ‘‘support’’ 

generally means the information, 

counseling, training, or assistance 

provided under the support system, 

including that provided by a support 

broker or consultant. We disagree that 

the regulation needs further amending 

to allow the State to provide limits to 

the PAS supports. If participants 

demonstrate that they cannot effectively 

manage their PAS or budgets, the rule 

provides States with options such as 

offering additional assistance, including 

FMS; mandating the use of a 

representative; or involuntarily 

disenrolling a participant from the selfdirected PAS option. 

Comment: One commenter requested 

clarification about how the requirement 

that States have a mechanism that 

satisfies the Medicaid requirements on 

provider agreements would apply when 

vendors furnish items and supplies. It is 

unclear who the ‘‘enrolled provider’’ is 

when services, items, or supplies are 

purchased with cash. 

Response: As self-directed PAS is not 

‘‘cash assistance’’ but rather is a service 

delivery model, the requirements on 

provider agreements at section 

1902(a)(27) of the Act would not be a 

barrier if a State elected the cash option. 

Comment: One commenter thought 

the definition of ‘‘assessment of need’’ 

was too vague. The commenter 

recommended use of a standardized 

assessment instrument. 

Response: We believe the definition of 

‘‘assessment of need’’ is adequate. We 

acknowledge that a standardized 

assessment instrument could lead to 

more uniformity in determining an 

individual’s PAS needs and encourage 

their use where possible. However, it 

may not be useful in determining the 

strengths, personal goals, and 

preferences of the individual for PAS 

which is essential in a self-directed 

service delivery model. Accordingly, we 

are not amending the definition of 

‘‘assessment of need’’ to require States 

to use a standardized assessment 

instrument, but recognize a State may 

nonetheless choose to do so. 

Comment: Some commenters 

suggested language to be included in the 

definition of ‘‘individualized backup 

plans.’’ The recommended language 

included additional language for the 

following areas: respecting the 

individual’s choices and preferences, 

planning for emergency preparedness, 

and a State assessment of worker 

shortage that could possibly impact the 

ability of an agency to provide back-up 

care, and if a shortage exists, require 

that the individual cannot enroll unless 

a backup plan can be developed that 

relies on family, personal, and available 

community services. 

Response: We agree with the 

comment that an individualized backup 

plan has to respect the individual’s 

choices and preferences and not 

substitute the individual’s choices with 

those of others who may be 

participating in the development of the 

backup plan. We believe that this is 

consistent with the ‘‘dignity of risk’’ 

concept that recognizes as individuals 

experience greater choice and control, 

they may also desire to assume more of 

the responsibilities and risks associated 

with the provision of their PAS. The 


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individualized backup plan is related to 

the provisions of the rule at § 441.476 

on risk management and should occur 

as part of the discussion about the risks 

an individual is willing and able to 

assume. As it is of utmost importance 

that the backup plan is individually 

tailored to the individual’s needs and 

preferences, we believe that a State or 

regional approach that treats all 

participants’ contingencies the same by 

imposing a requirement that 

participants should simply contact 911 

emergency services in the event of a 

critical contingency or incident, is not a 

sufficiently individualized backup plan. 

We have revised the definition of 

‘‘individualized backup plan’’ in 

§ 441.450(c) to clarify that the 

individualized backup plan must 

demonstrate an interface with the risk 

management provision at § 441.476 

which requires States to assess and 

identify the potential risks to the 

participant (such as any critical health 

needs), and ensure that the risks and 

how they will be managed are the result 

of discussion and negotiation among 

persons involved in the service plan 

development. We have also revised the 

definition to include that the backup 

plan must be individualized as well as 

not include a 911 emergency system or 

other emergency system as the sole 

backup feature of the plan. 

We also agree that emergency 

preparedness may be a part of the 

individualized backup planning; 

however, we must stress that these two 

things are not the same. We view 

‘‘emergency preparedness’’ as 

addressing the contingency of a natural 

disaster or other similar catastrophic 

disaster and planning for how the 

participant will be secured or evacuated 

to safety. We view the ‘‘individualized 

backup plan’’ as a much broader 

participant protection than emergency 

preparedness. We view the 

individualized backup plan as a 

cornerstone to self-directed PAS 

because it sets forth the participant’s 

wishes in a critical contingency or 

incident that would pose a risk of harm 

to the participant’s health or welfare. 

While ‘‘emergency preparedness’’ can 

be part of an individualized backup 

plan, we do not believe additional 

language is necessary for it to be 

included. 

We disagree with the comment that 

individuals should not be permitted to 

enroll in the self-directed PAS State 

plan option if an individualized backup 

plan cannot be developed which relies 

on family, personal, and available 

community services. While we are 

aware that some individuals who select 

the self-directed State plan option will 

not have access to family and personal 

resources or to community resources, in 

these instances, the supports broker or 

consultant would help the individual 

locate and access the providers of PAS 

needed by the individual. If, after 

reasonable effort by the supports broker 

or consultant, it is not possible to locate 

providers of PAS suitable to the 

individual, then it would be permissible 

to delay the individual’s enrollment in 

the self-directed PAS option until such 

time as suitable providers of their PAS 

can be found. We do not believe that the 

definition of ‘‘individualized backup 

plan’’ needs to be revised to reflect this 

procedure because the definition of 

‘‘supports broker or consultant’’ 

indicates that one of the roles of the 

supports broker or consultant is to help 

an individual locate and access needed 

PAS, if necessary. 

Comment: We invited comments on 

other possible relationships that could 

be included within the definition of 

‘‘legally liable relatives’’ (LLRs). One 

commenter thought that ‘‘significant 

others’’ should be included in the 

definition. Some commenters suggested 

that we amend the rule to include 

provider training requirements and 

other safeguards. Another commenter 

suggested that we amend the regulation 

to require States to have a mechanism 

to deal with situations in which 

participants may be pressured to hire a 

family member or friend or are having 

difficulty discharging a family member 

or friend. 

Response: We disagree that the 

definition should be revised to include 

‘‘significant others.’’ We believe it is up 

to the States to determine what 

relationships they include in their 

definition of ‘‘legally liable relatives’’. 

We also disagree that the regulation 

should be revised to specify certain 

safeguards, such as minimum training 

requirements, competency evaluations, 

criminal background checks, or other 

modifications to ensure that PAS 

workers, including LLRs, are properly 

trained and qualified to perform the 

functions of their jobs. One of the most 

valued aspects of a self-directed 

program is that participants have the 

authority to train their providers of PAS 

in what they need and how to deliver 

the PAS in accordance with their 

personal, cultural, and religious 

preferences. As noted previously, we 

have revised the regulation at § 441.450 

to permit participants to have access to 

other training provided by or through 

the State so that their PAS providers can 

meet any additional qualifications that 

participants think are needed or desired. 

Accordingly, we do not believe that the 

rule needs to be revised to specify 

provider training requirements as this 

will vary from participant to participant. 

We further do not believe that the 

regulations need to be revised to require 

that States have a mechanism to deal 

with situations in which participants 

may be pressured to hire a family 

member or friend or where they are 

having difficulty discharging a family 

member or friend. The role of the 

supports broker or consultant is to assist 

the participant in managing their PAS 

and budget plans, including how to hire 

the person most suitable to the 

participant, and how to discharge the 

worker if necessary. Finally, as noted 

above, we do not believe the regulation 

needs to be revised to add more 

safeguards to detect whether needed 

services are actually being provided. We 

believe that the regulation provides 

sufficient participant protections to 

detect whether needed services are 

actually being provided. It is CMS’ 

expectation that participants’ services 

and budget plans will be monitored by 

supports brokers or consultants; that the 

FMS entities, as required in the rule, 

will report any irregularities detected to 

participants and States; and that the 

State Medicaid agency will exercise 

ongoing oversight and monitoring of the 

provision of PAS through its Quality 

Assurance and Improvement Plan and 

remediate any problematic issues for 

participants. 

Comment: One commenter noted that 

the definition of ‘‘self-direction’’ did not 

acknowledge that participants who selfdirect their PAS must have the ability to 

perform the required roles and 

responsibilities. Another commenter 

sought further clarification of the 

definition of ‘‘self-direction.’’ The 

commenter stated that a clarification 

may be needed to ensure that the 

maximum amount and scope of a 

person’s budget will not exceed the 

level of services determined by the 

assessment or the budget established by 

the valid budget methodology. 

Response: The self-directed service 

delivery model does not presume who 

can and cannot self-direct their PAS. 

Instead, the model requires that the 

participant is assessed for their need for 

PAS, and furnished the necessary 

information, counseling, training, and 

assistance so that the participant can 

manage his services and budget. In 

addition to the support system, the 

regulations provide several other 

mechanisms that enable participants to 

manage their services and budgets such 

as the use of a representative to assist 

the participant to exercise his decisionmaking authority over the services and 

budget. If a participant is no longer able 

or willing to self-direct their PAS, the 


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State is allowed to require additional 

assistance for the participant, mandate 

the use of a representative, or, if need 

be, involuntarily disenroll the 

participant. Therefore, we have not 

revised the regulation as we do not 

believe any clarification is necessary. 

Moreover, the regulation at § 441.470 

clearly sets out the steps for determining 

a participant’s budget amount such that 

we do not believe that the budget will 

exceed the level of needed PAS. 

Comment: A few commenters had 

concerns about the definition of the 

‘‘service plan.’’ One commenter 

suggested that the definition not require 

unpaid caregivers to attend the planning 

meeting, but instead, provide the service 

hours that are included in the service 

plan. One commenter cautioned against 

a reduction in the budget based on an 

erroneous assumption that informal 

support is available and another sought 

minimum qualifications for those 

responsible for development of the 

service plan. 

Response: The definition of ‘‘service 

plan’’ permits the participant to direct 

the planning process, including inviting 

the participant’s family or others of the 

participant’s choosing to the planning 

meeting. This is not a requirement, 

however. In addition, we believe it 

would be inappropriate to revise the 

definition to require any minimum 

qualifications of individuals responsible 

for development of the service plan as 

States should have the flexibility to craft 

their own requirements. However, we 

acknowledge that there may be a ‘‘lead’’ 

person who will assume responsibility 

for assuring that the planning meetings 

occur and that the resultant plan meets 

the regulatory requirements. We would 

expect that this individual or 

individuals would minimally be 

familiar with person-centered and 

directed planning and person-centered 

services, and preferably possess 

demonstrated skill to facilitate personcentered and directed planning. We 

wish to clarify that our reference to 

persons who are ‘‘required’’ to attend 

the planning meeting was to include 

those persons who may be required by 

the State to attend the person-centered 

planning meeting. We did not intend to 

suggest that the participant should 

require the attendance of family, 

friends, or others who do not wish to 

participate in the meeting. Finally, we 

agree that the service budget should not 

be reduced based on an erroneous 

assumption about the level of service 

that an informal caregiver would be 

providing. 

Comment: Two commenters indicated 

that the requirements for a 

comprehensive assessment, care 

planning, health and welfare 

assurances, and monitoring appear to 

meet the definition of case management 

as defined in section 6052 of the DRA, 

Optional State Plan Case Management 

Services. They also requested 

clarification on whether a participant 

who elects this option will be unable to 

receive any other type of case 

management covered by Medicaid. One 

commenter asked how States would 

reconcile the requirements of the selfdirected PAS State plan option final 

rule with section 6052 of the DRA. For 

example, as outlined in the January 18, 

2008 self-directed PAS State plan option 

proposed rule, CMS ‘‘requires case 

management services under selfdirected PAS,’’ but the case 

management provision of the DRA 

prohibits States from requiring 

beneficiaries to receive case 

management. Furthermore, the 

commenter suggested that the selfdirected PAS State plan option 

proposed rule requires ‘‘gate-keeping’’ 

and advocacy functions but the case 

management DRA provision requires 

these functions to be separated by 

payment source and beneficiaries to be 

allowed to select from all qualified 

providers. One commenter asked how 

CMS could require a case manager to 

monitor the participant’s service plan 

under the self-directed PAS State plan 

option, if, as stated in the case 

management DRA provision, the State 

cannot bill for services defined as ‘‘case 

management’’ as administrative or other 

services. 

Response: We believe that the 

functions that are required of the 

supports broker or consultant are not 

‘‘case management’’ within the 

definition of case management provided 

pursuant to section 1915(g)(2) of the 

Act, as revised by section 6052 of the 

DRA. Section 1915(g)(2) of the Act 

defines case management services for 

purposes of section 1915(g) of the Act as 

services that will ‘‘assist individuals 

eligible under the State plan in gaining 

access to needed medical, social, 

educational, and other services.’’ Case 

management includes the following: 

Assessment of an eligible individual to 

determine service needs, including 

activities that focus on needs 

identification; development of a specific 

care plan based on the information 

collected through the assessment; 

referral and related activities to help an 

individual obtain needed services, 

including activities that help link the 

eligible individual with medical, social, 

educational providers, or to other 

programs and services that are capable 

of providing needed services; and 

monitoring and follow-up activities, 

including activities and contacts that are 

necessary to ensure that the care plan is 

effectively implemented and adequately 

addresses the needs of the eligible 

individual. 

We believe that the relationship 

between a supports broker or consultant 

and a participant and the assistance 

provided by the supports broker or 

consultant in the self-directed PAS State 

plan option is fundamentally different 

than the relationship required between 

a case manager and beneficiary and the 

assistance provided by a case manager. 

Supports brokers or consultants are 

agents of the participants in that they 

are primarily responsible for facilitating 

participants’ needs in a manner that 

comports with the participants’ 

preferences. As the relationship that 

develops must be supportive and 

ongoing, participants may request a 

different supports broker or consultant 

if the relationship is not working out. 

Furthermore, the functions performed 

by supports brokers or consultants are 

unique to the self-directed service 

delivery model because supports 

brokers or consultants are primarily 

responsible for providing information, 

training, and counseling and assistance, 

as desired by participants, that help 

participants effectively manage their 

PAS and budgets. These functions 

include helping participants develop 

their service budget plans and fulfill 

their employer-related responsibilities. 

This assistance can also include helping 

participants locate and access PAS, but 

supports brokers or consultants do not 

perform assessments of need or develop 

care plans. Although supports brokers 

or consultants do perform a monitoring 

function for the purpose of checking 

whether participants’ health status has 

changed, they are also verifying whether 

expenditures of funds are being made in 

accordance with the service budget 

plans. 

Because of the unique position of a 

supports broker or consultant under the 

self-directed PAS State plan model, we 

believe that a traditional case manager 

can perform the functions of supports 

brokers or consultants only if they 

receive training in the self-directed 

service delivery model that includes a 

demonstrated capacity to understand 

that they are to assist the participants 

with fulfilling their preferences, and not 

supplant the participants’ preferences 

with their views or preferences. As 

evidenced by the comment, it is 

important to avoid confusion between 

the functions of a supports broker or 

consultant and the services furnished by 

a case manager, and we believe a 

definition of supports broker or 


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consultant would clarify the functions. 

Accordingly, we have revised 

§ 441.450(c) to add a definition of 

supports broker and consultants that 

reflects the unique role and functions of 

the supports broker or consultant; that 

requires States to develop a protocol to 

ensure that supports brokers or 

consultants are accessible to 

participants, have regularly scheduled 

phone and in-person contacts with 

participants, monitor whether 

participants’ health status has changed 

and whether expenditure of funds are 

being made in accordance with service 

budget plans; and to require that 

supports brokers or consultants meet the 

training and monitoring requirements 

and qualifications required by their 

respective State. We have also added to 

§ 441.450(c) the requirement that 

support brokers or consultants be 

available to each participant as part of 

the support system. 

Comment: One commenter suggested 

that we include a definition of ‘‘personcentered services’’ or ‘‘person-directed 

planning’’ because it is critical that 

States have a uniform understanding 

and application of these concepts. 

Response: We include in the 

regulations at § 441.468(b)(1) a 

requirement that the service planning 

process be ‘‘person-centered and 

directed’’ to ensure the identification of 

each participant’s preferences, choices, 

and abilities, and strategies to address 

those preferences, choices, and abilities. 

We further require at § 441.468(c)(1) that 

the State’s procedures governing service 

plan development allow the participant 

to engage in and direct the process to 

the extent desired, and allow the 

participant the opportunity to involve 

family, friends, and professionals. We 

do not believe that the regulation should 

be revised to add definitions of ‘‘personcentered services’’ or ‘‘person-directed 

planning,’’ because the intent of such 

processes is clear and we wish to 

provide flexibility in implementing the 

concepts. We wish to note there are 

numerous resources available that 

define ‘‘person-centered planning’’ and 

‘‘person-centered services’’ to assist the 

States. There are also different models 

(for example, MAPS, PATH, ELP, 

Personal Futures Planning) of personcentered planning. According to one 

resource, (Schwartz, A.A., Jacobson, 

J.W., & Holburn, S. (2000)). Defining 

‘‘person-centeredness’’: Results of two 

consensus methods. Education & 

Training in Mental Retardation & 

Developmental Disabilities), each model 

has a different emphasis and should be 

applied based on the needs of the 

individual. Furthermore, the authors 

indicate that all models share a common 

underlying set of eight basic 

characteristics. These characteristics 

include the following: 

• The person’s activities, services and 

supports are based on his or her dreams, 

interests, preferences, strengths, and 

capacities 

• The person and people important to 

him or her are included in planning, 

and have the opportunity to exercise 

control and make informed decisions 

• The person has meaningful choices, 

with decisions based on his or her 

experiences 

• The person uses, when possible, 

natural and community supports 

• Activities, supports and services 

foster skills to achieve personal 

relationships, community inclusion, 

dignity, and respect 

• The person’s opportunities and 

experiences are maximized, and 

flexibility is enhanced within existing 

regulatory and funding constraints 

• Planning is collaborative, recurring, 

and involves an ongoing commitment to 

the person 

• The person is satisfied with his or 

her activities, supports and services. 

Generally, any model for personcentered planning a State uses should 

be based on the wishes and needs of the 

individual. With respect to the concept 

of ‘‘person-directed’’ planning, we 

expect that participants will actually 

direct the service planning and budget 

development. We think this is an 

important aspect of person-centered 

planning in order to ensure that the 

resultant service and budget plan 

actively engages a participant, 

accurately reflects a participant’s 

abilities, preferences, and choices, and 

better meets the underlying purpose of 

the self-directed PAS option. We are 

available to provide information and 

technical assistance to any State that 

desires it. 

After consideration of public 

comments received, we are finalizing 

§ 441.450 with revision to the definition 

of individualized backup plan and 

addition of a definition of supports 

broker or consultant. We have also 

generally added ‘‘representative’’ 

throughout the regulations, as 

applicable. 

Self-Direction: General (§ 441.452) 

We proposed that States must have in 

place, before electing the self-directed 

PAS option, personal care services 

through the State plan, or home and 

community-based services under a 

section 1915(c) waiver. We proposed 

that the State must have both traditional 

service delivery and the self-directed 

PAS service delivery option available in 

the event that an individual voluntarily 

disenrolls or is involuntarily 

disenrolled, from the self-directed PAS 

service delivery option. We also 

proposed that the State’s assessment of 

an individual’s needs must form the 

basis of the level of services for which 

the individual is eligible and that 

nothing in the self-directed PAS State 

plan option would be construed as 

affecting an individual’s Medicaid 

eligibility, including that of an 

individual whose Medicaid eligibility is 

attained through receipt of section 

1915(c) waiver services. 

Comment: One commenter requested 

that CMS recognize other delivery 

models as ‘‘traditional’’ besides 

‘‘agency-delivered’’ services. This same 

commenter asked whether a State that 

offers home health services under its 

State plan could meet the requirement 

for a ‘‘traditional’’ service-delivery 

model under this rule. Finally, this 

commenter sought clarification on 

whether the requirement that States 

offer a ‘‘non-self-directed’’ model refers 

only to the ‘‘agency-delivered’’ service 

model. Another commenter indicated 

that it is imperative that all participants 

retain the option to use the ‘‘traditional’’ 

service-delivery system. 

Response: In the preamble to the 

proposed rule, we construed the 

‘‘traditional’’ service-delivery model to 

mean ‘‘traditional agency-delivered 

services’’, i.e., the personal care and 

related services and section 1915(c) 

waiver services that are delivered by 

personnel hired, supervised, and 

managed by a home care or similar 

agency. We agree with the commenters 

that we should not limit the 

‘‘traditional’’ delivery system to 

‘‘agency-delivered services’’ and now 

construe ‘‘traditional’’ delivery system 

to mean the delivery system that the 

State has in place to provide their State 

plan optional personal care services 

benefit or their section 1915(c) waiver 

services for individuals who are not 

self-directing their PAS under a section 

1915(j) State plan option. 

‘‘Personal care and related services’’ 

as used in section 1915(j)(4)(A) of the 

Act are those services that are included 

in the State’s definition of its optional 

personal care services benefit and not 

other State plan services such as home 

health. We further note section 

1915(j)(2)(C) of the Act already requires 

that participation in the self-directed 

PAS State plan option is voluntary. 

Also, the regulation at § 441.456 permits 

participants to voluntarily disenroll 

from the self-directed PAS option. 

Finally, the regulation at § 441.458 

allows States to involuntarily disenroll 

participants. In the event of a voluntary 

or involuntary disenrollment, 


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participants must resume receiving 

traditional services to which they are 

eligible under the State plan personal 

care service benefit or a section 1915(c) 

waiver program. 

After consideration of the public 

comments received, we are finalizing 

§ 441.452 without revision. 

Use of Cash (§ 441.454) 

We proposed that States have the 

option to disburse cash prospectively to 

participants self-directing their PAS, 

and further, that States must ensure 

compliance with all applicable Internal 

Revenue Service requirements; that 

participants, at their option, could use 

the financial management entity for 

some or all of the functions described in 

§ 441.484(c); and that States must make 

a financial management entity available 

to participants if they demonstrated, 

after additional counseling, information, 

training, or assistance, that they could 

not effectively manage the cash option. 

Comment: One commenter thought 

that allowing individuals who choose 

the cash option to perform tax-related 

reporting functions puts the individual 

at risk with the Internal Revenue 

Service (IRS). One commenter asserted 

that older persons and persons with 

disabilities are unlikely to be able to 

properly manage the quarterly IRS tax 

payments. One commenter suggested 

that the rule be revised to permit the 

State to require a participant to use the 

financial management services (FMS) 

entity for all or part of the functions 

described in § 441.484(c). One 

commenter thought that making use of 

the FMS entity optional would add an 

additional administrative and cost 

burden to the States. Also, the 

commenter stated that it is unwise for 

CMS to allow the practice of the hours 

of needed PAS to be determined by the 

wage/pay needs of the provider of care 

rather than the hours of PAS actually 

needed by the individual. 

Response: On September 13, 2007, we 

released a State Medicaid Director Letter 

(SMDL#07–013), with preprint, for the 

self-directed PAS State plan option. In 

the preprint, we indicate that States 

must assure that all IRS requirements 

regarding payroll/tax filing functions 

will be followed, including when 

participants perform these functions 

themselves. In the regulation at 

§ 441.454, we require that States can 

elect to disburse cash prospectively to 

participants who are self-directing their 

PAS and must ensure compliance with 

the IRS requirements if they adopt this 

option. We have revised the regulation 

at § 441.454(b) to add a minimum list of 

the tax-related responsibilities that are 

required by the IRS because we believe 

these examples will help to illustrate 

some of the tax-related responsibilities 

that must be performed. We recognize 

that not all participants who select the 

cash option will have the interest or 

skill to bear these responsibilities, so the 

regulation at § 441.454(c) notes that 

participants may use a FMS entity to 

perform some or all of the employer and 

tax-related functions. We disagree that 

the regulation should permit the State to 

require a participant to use an FMS 

entity if that individual has selected the 

cash option and have not changed the 

rule. The purpose of the self-directed 

service delivery model is to vest 

participants with the choice and 

authority over decisions about their PAS 

and budget purchases. Therefore, when 

participants who have selected the cash 

option also choose to perform some or 

all of their employer and tax-related 

functions, we intend for that decision to 

be respected. Thereafter, if participants 

experience difficulty in performing 

some or all of these functions, or no 

longer choose to perform them, the 

regulation at § 441.454(c) permits 

participants to use the services of the 

FMS entity. We acknowledge that States 

who have not yet built an infrastructure 

to support this self-directed State plan 

option will likely experience an initial 

higher administrative and cost burden, 

but again, the State is best suited to 

make a determination on how best to 

expend its resources. Lastly, the 

commenter misconstrues the link of 

needed hours of PAS to the wage/pay 

needs of the provider. The regulation 

does not permit the wage/pay needs of 

the provider of PAS to determine the 

wage/pay they will be paid; rather, the 

participant determines the amount to be 

paid for a service, support, or item. 

Comment: One commenter requested 

guidance on whether the FMS functions 

can be divided between a State and an 

FMS entity. Another commenter asked 

that we delineate the fiscal 

responsibilities that a participant who 

chooses the cash option may manage 

without the involvement of an FMS 

entity, and those that the State or FMS 

must retain, for example, disbursing the 

cash and monitoring spending. 

Response: We believe these issues are 

best handled on a case-by-case basis as 

we believe it is important that States 

have the flexibility in the oversight of 

the functions it has delegated to an FMS 

entity versus those it has retained. 

Comment: One commenter requested 

more detail in the requirements 

pertaining to the cash option. 

Response: We believe the 

requirements for the cash option have 

been adequately addressed in 

§ 441.454(c) of the regulation. We can 

work to provide further technical 

guidance and assistance to States on a 

case-by-case basis, as needed. 

Comment: One commenter had 

concerns about how the IRS would treat 

the cash received by a participant and 

asked if there is an IRS ruling on the 

income tax consequences for 

participants who choose the cash 

option. 

Response: We are unaware of any IRS 

ruling regarding the cash option under 

the self-directed PAS State plan option. 

After consideration of the public 

comments received, we are finalizing 

§ 441.454 with revision to provide 

examples of tax-related responsibilities 

required by the IRS. 

Voluntary Disenrollment/Involuntary 

Disenrollment (§ 441.456 and § 441.458) 

In these provisions, we proposed that 

States must permit a participant to 

voluntarily disenroll from the selfdirected PAS option at any time, and 

that States must specify the conditions 

under which a participant may be 

involuntarily disenrolled from the selfdirected PAS option. We proposed that 

CMS must approve the State’s 

conditions under which a participant 

may be involuntarily disenrolled. In 

both situations, we proposed that the 

State must specify in the State plan the 

safeguards that are in place to ensure 

continuity of services during the 

transition from self-directed PAS to the 

traditional service delivery system. 

Comment: Some commenters stated 

that States would not have the ability to 

guarantee ‘‘continuity of services during 

the transition from self-directed PAS’’ 

such that the rule needs to clarify that 

the safeguards to ensure continuity of 

services belong in the section 1915(j) 

State plan amendment, and not in other 

parts of a State’s plan; and that States be 

required to have a ‘‘transition period’’ in 

the State plan amendment. 

Response: We continue to believe that 

States must have the discretion and 

flexibility to design their own 

procedures to guarantee the continuity 

of services when a participant 

voluntarily or involuntarily disenrolls 

from the self-directed PAS State plan 

option. We further believe States have 

the ability to guarantee ‘‘continuity of 

services during the transition from selfdirected PAS.’’ Accordingly, we have 

not revised the regulations to provide a 

transition period as the commenters 

suggested. However, we agree with the 

commenters that the safeguards are 

better suited in the section 1915(j) State 

plan amendment. Accordingly, we have 

revised the regulation at § 441.456(b) 

and § 441.458(c) to make the technical 

change that the safeguards be listed in 


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the section 1915(j) State plan 

amendment and not other parts of a 

State plan. 

Comment: Some commenters 

suggested that participants receive 

information about disenrollment at the 

time of enrollment and that information 

about feasible alternatives and 

disenrollment should be communicated 

in a manner that is clearly 

understandable by the individual. 

Response: We agree that individuals 

should receive information about 

disenrollment at the time of enrollment 

and we believe that this information 

would be best communicated as part of 

the initial counseling that is provided to 

the individual. Accordingly, we have 

revised the regulation at § 441.464(d)(1) 

to require that a State inform 

individuals about disenrollment at the 

time of counseling prior to enrollment. 

We also agree with the comments that 

all information be communicated to the 

individual in a manner and language 

understandable by the individual. We 

have revised the regulations at 

§ 441.464(c) and § 441.464(d) to reflect 

this requirement. We believe that these 

issues are better suited to the 

regulations at § 441.464 as we believe 

that areas such as information and 

effective communication are more 

properly within the scope of the support 

system provisions at § 441.464, and thus 

have revised those regulations 

accordingly. 

Comment: One commenter 

recommended that the rule be revised to 

require that if a participant is 

dissatisfied with their FMS entity or 

their ‘‘agency with choice’’ entity, that 

the State offer the participant another 

entity to furnish these supports before 

disenrolling a participant who seeks to 

voluntarily disenroll from the selfdirected PAS option. 

Response: We believe decisions about 

whether to offer another entity to a 

participant and the circumstances under 

which participants may be disenrolled 

are best determined by each State when 

they design their self-directed PAS State 

plan option. Accordingly, we have not 

changed the regulation to require that a 

State offer a participant another FMS or 

agency with choice entity if the 

participant becomes dissatisfied with 

their current one. We do, however, 

encourage States to design their selfdirected PAS State plan option to 

optimize the choice and authority 

participants will be able to exercise over 

their needed supports. 

Comment: One commenter suggested 

that we include protections for workers 

in the rule at § 441.458. Specifically, the 

commenter recommended that the rule 

be revised to permit the State to 

involuntarily disenroll a participant 

who is violating anti-discrimination 

laws and other applicable federal or 

state labor laws and regulations. 

Response: We believe that issues 

about potential worker discrimination 

or violations of labor laws and 

regulations are best handled as part of 

the initial and ongoing information, 

counseling, training, and assistance that 

are provided by the supports brokers or 

consultants to the participants. We 

further believe that States could make 

the determination whether potential 

worker discrimination or violations of 

labor laws and regulations could be a 

condition of disenrollment from the 

self-directed PAS State plan option. As 

we believe that States are best suited to 

make this determination, we do not 

believe it requires a revision to the 

regulations. 

Comment: One commenter stated that 

States should not involuntarily disenroll 

participants because of discomfort with 

the participant’s personal preferences. 

Also, the commenter suggested that the 

participant be given an opportunity to 

rebut a decision of involuntary 

disenrollment. Another commenter 

recommended that CMS revise the 

regulations to clarify that States should 

not be allowed to involuntarily disenroll 

a participant when that participant is 

fully accessing services pursuant to the 

service plan and, as applicable, 

complying with his risk management 

agreement. 

Response: We agree that States should 

not disenroll a participant based on 

discomfort with a participant’s personal 

preferences, or when a participant is 

fully accessing services pursuant to the 

service plan and complying with any 

applicable risk management agreement. 

We will be carefully reviewing the 

State’s submission of the conditions for 

involuntary disenrollment. We strongly 

encourage States to respect participants’ 

personal preferences and to afford 

participants their dignity of risk. As 

stated previously, the concept of 

‘‘dignity of risk’’ recognizes that as 

individuals experience greater choice 

and control, they may also desire to 

assume more of the responsibilities and 

risks associated with the provision of 

their PAS. If a State has concerns about 

participants’ personal preferences or 

other risks participants may wish to 

assume, we encourage States to use risk 

mitigation strategies, such as the use of 

a risk agreement. A ‘‘risk agreement’’ is 

an agreement entered into between the 

participant and relevant and necessary 

parties. It identifies the risks that the 

participant is willing to assume, the 

responsibilities that the participant and 

others are willing to undertake to 

mitigate the identified risks, and the 

circumstances that might cause the 

agreement to be terminated. The risks 

that participants may assume and how 

to mitigate them are subjects of 

discussion and negotiation as required 

in the regulations at § 441.476. We do 

not believe that the rule requires further 

revision as suggested by the commenter 

since the regulations at § 441.476 

adequately address risk management 

requirements. 

After consideration of the public 

comments received, we are finalizing 

§ 441.456 and § 441.458 with revision 

for a technical change to specify that the 

safeguards for ensuring continuity of 

services during the transition from selfdirected PAS be listed in the 1915(j) 

State Plan Amendment. 

Participant Living Arrangements 

(§ 441.460) 

In order to reflect the requirement at 

section 1915(j)(1) of the Act, we 

proposed that self-directed PAS are not 

available to an individual who resides 

in a home or property that is owned, 

operated, or controlled by a provider of 

services who is not related to the 

individual by blood or marriage. We 

proposed that States may specify 

additional restrictions on a participant’s 

living arrangements if they have been 

approved by CMS. 

Comment: A few commenters 

opposed the inclusion of assisted living 

facilities (ALFs) within the requirement 

that self-directed PAS cannot be 

provided in a home or property owned, 

operated, or controlled by a provider of 

services who is unrelated by blood or 

marriage to the individual. The 

commenters offered a variety of reasons 

that would support how ALFs could 

successfully provide PAS. A few other 

commenters noted that the limitation on 

living arrangements should not apply to 

individuals who choose to live in the 

home of a non-related provider of 

services, for example, a domestic 

partner or a friend, who is the paid 

provider of their PAS. Some 

commenters stated that the rule should 

be revised to clarify that an individual 

should not be precluded from the selfdirected PAS option unless they are 

living in arrangements where the 

housing and the PAS are provided by 

the same individual or entity and the 

PAS are part of the paid services. A 

commenter suggested that we clarify 

that the prohibition would not apply to 

a landlord-tenant relationship that 

meets local and State tenant laws; a 

housing provider who co-signs a lease to 

allow an individual to secure affordable 

housing; or a service provider’s housing 

corporation that helps the individual 


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secure housing, when the housing 

corporation has separate governance 

from the service provider. A commenter 

thought that the requirement was too 

restrictive and would preclude persons 

with severe disabilities who need 

extensive support from the option to 

self-direct their PAS. 

Response: The statute is very clear as 

to the type of living arrangements that 

could be entered into under this selfdirected PAS State plan option. The 

living arrangements should optimize 

participant independence, choice, and 

community integration and are intended 

to mitigate the control that some 

providers of PAS could exert over 

participants if participants lived in a 

setting owned, operated, or controlled 

by the unrelated providers of PAS. The 

exception is if the provider of PAS is 

related by blood or marriage to the 

participant because it is presumed that 

providers of PAS related by blood or 

marriage to the participant will not exert 

undue influence over the participant 

and will facilitate, and not impede, the 

participant’s self-direction of the 

participant’s PAS and budget. 

In the proposed rule published on 

January 18, 2008, we noted that, 

‘‘programs that have successfully 

provided the self-directed care option 

have typically provided it to individuals 

who live in homes of their own or in the 

homes of their families.’’ We also noted 

that we believe that ‘‘successfully 

directing one’s own care may become 

less feasible when individuals receive 

services and reside in large, providerowned, operated, or controlled 

residential living arrangements.’’ We 

provided an example of a residential 

facility that also provides and receives 

payment for the provision of personal 

care and related services that may 

prohibit the self-directed service 

delivery option for fear of duplication of 

services. We further noted that we 

believed this limitation should be 

applied to individuals residing in ALFs, 

as we anticipated that the provider 

would both control the housing and be 

expected to provide the PAS. However, 

we noted that we did not believe this 

limitation would apply to situations in 

which the individual resided in the 

home of another whom the individual 

wished to employ under the selfdirected PAS option. We are now 

clarifying that any living arrangement, 

irrespective of the home-like nature of 

the setting, that is owned, operated, or 

controlled by a provider of the 

participant’s PAS, not related by blood 

or marriage to the participant, is not 

permitted by statute in the self-directed 

State plan option. We agree with the 

commenters that stated that the 

regulations should be revised to clarify 

that an individual should not be 

precluded from the self-directed PAS 

option unless they are living in 

arrangements where the housing and the 

PAS are both provided by the same 

individual or entity and the PAS are 

part of the paid services. We have 

revised the regulation at § 441.460(a) to 

insert ‘‘PAS’’ before ‘‘provider’’, thereby 

indicating that the limitation only 

applies where the living arrangement 

and the PAS are provided by one and 

the same individual or entity. We 

further wish to clarify that when we 

referenced the ‘‘home of another’’ in the 

proposed rule, we intended that the 

home was controlled, operated, or 

owned by someone related by blood or 

marriage to the participant and so we 

allowed this under the exception to the 

statutory limitation. 

Based on the comments we received 

pertaining to ALFs, we understand that 

there are some ALFs that are not in the 

business of providing PAS. Accordingly, 

we believe that where the living 

arrangements, including ALFs, do not 

furnish PAS (as that term is defined 

under the self-directed PAS State plan 

option), then the living arrangements 

may be conducive to the participant’s 

successful and effective self-direction of 

their PAS and budgets. If a supports 

broker or consultant, the State, or other 

person known to the participant, 

becomes aware that the participant’s 

exercise of choice over their PAS and 

budgets is hindered because the nature 

of the living arrangement has changed, 

the living arrangement begins to offer 

PAS, or other conditions arise making 

self-direction of the participant’s PAS 

overly difficult or impossible, then the 

State must promptly rectify the situation 

by assisting the participant to find other 

acceptable and safe housing. 

Comment: A commenter 

recommended that we delete 

§ 441.460(b), which permits States to 

specify additional restrictions on 

participant’s living arrangements if 

approved by CMS. The commenter 

stated that this provision could possibly 

be used by States to overly restrict selfdirected PAS. 

Response: We will be reviewing any 

State proposal further restricting 

participant living arrangements to 

ensure all proposals further enable the 

participant to engage in meaningful selfdirection of PAS and are not a 

restriction to self-directed PAS. 

Based upon consideration of public 

comments received, we are finalizing 

§ 441.460, with revision, to clarify the 

living arrangement prohibition is for a 

living arrangement where the living 

arrangement and a PAS provider are one 

and the same individual or entity. 

Statewideness, Comparability, and 

Limitations on Number Served 

(§ 441.462) 

To reflect the requirements at section 

1915(j)(3) of the Act, we proposed that 

States may provide self-directed PAS 

without regard to the requirements of 

statewideness, comparability of 

services, or the number of individuals 

served. 

Comment: Some commenters 

disagreed with CMS that the Medicaid 

requirements for statewideness and 

comparability should be disregarded. 

One commenter stated that States would 

not offer the self-direction option to 

certain population groups that the State 

perceived as unable to self-direct their 

PAS. Another commenter thought that 

to disregard comparability and 

statewideness would unfairly 

disadvantage agencies that have to meet 

stricter or more burdensome 

requirements. In contrast, one 

commenter urged that we ‘‘encourage’’ 

or ‘‘require’’ States that have never 

implemented or had oversight for a selfdirected PAS program to first 

implement a program in a particular 

region and to a particular population or 

both. Alternatively, the commenter 

recommended that the number of 

people served should be limited. 

Response: The regulation at § 441.462 

reflects the requirement in section 

1915(j)(3) of the Act that permits a State 

to provide self-directed PAS without 

regard to statewideness, comparability 

of services, or the number of individuals 

served. We believe that by providing 

States this flexibility, States could allow 

for incremental growth in offering selfdirected PAS under the State plan 

option. As States gain more experience, 

they can amend their State plans to 

allow self-directed PAS statewide, to 

different populations and to more 

individuals. We note § 441.462 reflects 

the provisions of section 1915(j)(3) of 

the Act, and is not intended to 

disadvantage agencies that provide 

traditionally delivered services or to 

adversely affect certain population 

groups. We believe that all population 

groups can successfully self-direct their 

PAS if they have the appropriate 

information, counseling, training, and 

assistance they need. 

Comment: A commenter sought 

clarification about the ‘‘populations’’ 

that could be targeted. Moreover, this 

commenter suggested we clarify that the 

State may subject each population to its 

own enrollment cap and specific 

eligibility criteria if the State so chooses. 


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

Act sets forth the initial eligibility 

criteria for participation in a selfdirected PAS State plan option. 

Specifically, section 1915(j)(1) requires 

that the self-directed PAS State plan 

opportunity be available to individuals 

for whom there has been a 

determination that, but for the provision 

of such services, would require and 

receive State plan personal care services 

or section 1915(c) waiver services. We 

believe that section 1915(j)(3), regarding 

comparability, permits States to target 

persons who are eligible for and 

receiving State plan personal care 

services or section 1915(c) waiver 

services. Section 1915(j) of the Act does 

not broaden or narrow a State’s 

definitions of the State’s personal care 

services benefit or section 1915(c) 

waiver services. 

Comment: A commenter asked 

whether the services described in the 

rule are mandatory under the early and 

periodic screening, diagnostic and 

treatment (EPSDT) system. 

Response: This rule implements 

section 1915(j) of the Act allowing 

States the option to amend their State 

plans to offer individuals the 

opportunity to self-direct their PAS. 

Therefore, Section 1915(j) of the Act 

offers the self-directed service delivery 

model as an alternative to traditionally 

delivered services. There are no new 

services that can be self-directed; rather, 

participants are afforded the 

opportunity to self-direct State plan 

personal care services and section 

1915(c) waiver services that they are 

already receiving. Accordingly, there is 

no ‘‘service’’ under section 1905(a) of 

the Act that must be provided under the 

EPSDT benefit. 

After consideration of the public 

comments received, we are finalizing 

§ 441.462 without revision. 

State Assurances (§ 441.464) 

We proposed to reflect the 

requirements at section 1915(j)(2) of the 

Act that States must provide several 

assurances: (1) That necessary 

safeguards have been taken to protect 

the health and welfare of individuals 

furnished services under the program 

and the financial accountability for 

funds expended for self-directed 

services; (2) that States perform an 

evaluation of the need for personal care 

under the State Plan or services under 

a section 1915(c) waiver program; (3) 

that individuals who are likely to 

require personal care under the State 

plan, or home and community-based 

services under a section 1915(c) waiver 

program are informed of the feasible 

alternatives, when available; (4) that 

States must provide a support system 

that meets several delineated 

conditions; (5) that the State must 

provide to CMS an annual report on the 

number of individuals served and the 

total expenditures on their behalf in the 

aggregate; and (6) that the State must 

provide to CMS an evaluation of the 

overall impact of the self-directed PAS 

option on the health and welfare of 

participating individuals compared to 

non-participants every 3 years. 

Necessary Safeguards (§ 441.464(a)) 

Comment: A few commenters stated 

that the Federal and state level of 

assurances should be the same between 

the self-directed and agency-delivered 

models of service delivery. The 

commenters offered several suggestions 

of safeguards that govern traditional 

agency-delivered services that CMS 

should require in the rule governing the 

self-directed PAS State plan option. 

Response: We disagree that the 

regulations should be revised to add the 

safeguards in the traditional agencydelivered service model suggested by 

the commenters because we believe that 

the requirements concerning needed 

safeguards are sufficient and adequately 

address the concerns and needs in a 

self-directed service delivery model. 

Furthermore, the self-directed service 

delivery model has been formally 

evaluated in the ‘‘Self-Determination’’ 

and ‘‘Cash & Counseling’’ national 

projects and the regulatory requirements 

reflect the safeguard analyses and 

conclusions made from those national 

projects. We believe it is also important 

to note that States retain oversight and 

monitoring functions and must fulfill 

the obligations in their QA/QI plans to 

discover critical incidents and 

complaints and to subsequently 

remediate them. 

Comment: A commenter suggested 

that CMS add safeguards to protect 

workers’ rights, health, and safety. 

Response: These issues are outside 

the scope of these regulations as they do 

not extend to workers’ rights, health, 

and safety. Therefore, we are not 

revising the regulations as the 

commenter suggested. However, as this 

self-directed PAS opportunity is a 

service delivery model it is not intended 

to conflict with existing laws governing 

workers’ rights, health, or safety issues. 

We understand the States and 

participants would comply with these 

laws and we encourage States and 

participants to consider affording 

workers these kinds of worker 

protections. 

Comment: A commenter 

recommended that CMS establish a 

federally-mandated resolution process 

that States would implement when 

problems would arise between 

consumers and providers. 

Response: We do not believe a 

mandated resolution process is either 

necessary or appropriate because we 

believe existing safeguards are sufficient 

to assist participants when problems 

arise between them and their PAS 

providers. We encourage participants to 

seek out any needed or desired training 

on how to be a better employer, or to 

consult with their supports broker or 

consultant or a person of their choosing, 

when there are employer-employee 

problems. There are also resources 

available to assist in resolving these 

issues, such as voluntary dispute 

resolution programs. If these types of 

programs exist in the participant’s 

community, and they may be of help, 

then we encourage participants and 

workers to avail themselves of that 

opportunity if they choose to do so. 

States may wish to consider providing 

such information during the counseling 

session with participants prior to their 

enrollment in the self-directed PAS 

State plan option. 

Comment: A commenter stated that at 

§ 441.464(a), CMS should add ‘‘quality 

of life’’ in addition to health and welfare 

for which States must have necessary 

safeguards. The commenter further 

recommended that we add a specific 

listing of safeguards related to the health 

and welfare and the quality of life of 

participants to the current list of 

financial safeguards. 

Response: We believe that States may 

measure ‘‘quality of life’’ issues in the 

quality assurance and improvement 

plan as well as in the three-year 

evaluation that the regulations require, 

if they choose to do so. Therefore, while 

we do not believe that the regulations 

should require ‘‘quality of life’’ 

safeguards, we do not prohibit States 

from incorporating them into the design 

of their QA/QI plan or their three-year 

evaluation. It should be noted that we 

will be issuing related guidance on the 

requirement for the three-year 

evaluation of the impact of the selfdirected PAS option on the health and 

welfare of participating individuals 

compared to non-participants. We 

believe that States could measure and 

analyze ‘‘quality of life’’ issues such as 

whether participants experienced 

greater independence, increased 

community access, or were able to work. 

Therefore, we are not adopting the 

commenter’s suggestion to change the 

regulations as we think States have the 

flexibility to design their QA/QI plans 

and their three-year evaluations to 

consider ‘‘quality of life’’ issues. 


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Financial Accountability (§ 441.464(a)) 

Comment: One commenter stated that 

the language describing necessary 

safeguards was too vague and would not 

assure financial accountability. The 

commenter recommended program 

controls and controls in the timekeeping 

system. 

Response: We agree that there should 

be program controls and controls in the 

timekeeping system, but we believe that 

States should have flexibility to set up 

their own program controls and 

timekeeping controls in order to meet 

the financial accountability 

requirements. We believe that the 

oversight functions of the service 

budgets and expenditures, required to 

be performed by the FMS entity, the 

supports brokers and consultants, and 

States, should adequately address the 

commenter’s concerns by providing 

adequate financial accountability. 

Comment: One commenter 

recommended that the amount of the 

budget not be allocated on a monthly or 

quarterly basis as indicated in 

§ 441.464(a)(2)(iii) because it would be 

too rigid. The commenter proposed that 

the regulation be revised to permit 

participants to plan for periods of 

greater or lesser needed coverage 

‘‘during the State’s budget period.’’ 

Response: We believe that prior 

planning for periods of greater or lesser 

utilization and the ability of States to 

allocate funds consistent with a 

participant’s plan, during the State’s 

budget period, is already provided for in 

the regulation. The prefatory language at 

section 441.464(a)(2) indicates that the 

listed safeguards, including allocating 

the budget on a monthly or quarterly 

basis, are permissive, not mandatory. 

Furthermore, we believe that the 

regulation at § 441.470, concerning the 

service budget elements, further affords 

the flexibility that the commenter 

desires. In § 441.470, the service budget 

must include procedures as to how the 

participants may adjust the budget plan, 

including how the participant may 

freely make changes to their budget plan 

and the circumstances, if any, that may 

require prior approval before a budget 

plan adjustment is made. 

Comment: Two commenters stated 

that abuse of funds could occur when 

participants selected the cash option. 

The commenters recommended that 

participants using the cash option be 

required to use a qualified financial 

management entity; that participants 

and their PAS providers are closely 

monitored to ensure that authorized 

services were actually delivered and 

properly accounted for in timesheets; 

and, that CMS develop criteria to ensure 

the financial accountability required, 

including one set of national guidelines. 

Response: At the core of the selfdirected service delivery model is 

participant ‘‘choice and control’’ over 

their services and budgets. The ability of 

participants to choose to perform some 

or all of their employer and tax-related 

responsibilities is in keeping with this 

tenet. If a participant discovers that he 

is not interested in or able to assume 

these responsibilities, then the 

participant may use the service of the 

FMS entity. While we understand the 

commenters’ concerns, we believe that 

the requirements for the State 

assurances at § 441.464(a), and for the 

supports system at § 441.454 and 

§ 441.464(d) adequately address the 

commenters’ concerns and provide the 

requested financial accountability and 

oversight. 

Comment: One commenter stated that 

although financial accountability is 

important, States should not become 

overly prescriptive about the ways in 

which individuals spend their budgets. 

Response: We agree with the 

comment that flexibility in the budget 

planning and spending should be 

encouraged by the State. 

Evaluation of Need (§ 441.464(b)) 

We proposed that the State must 

perform an evaluation of the need for 

personal care under the State plan or 

services under a section 1915(c) waiver 

program for certain individuals. We 

received no comments on this proposal. 

Notification of Feasible Alternatives 

(§ 441.464(c)) 

Comment: One commenter 

recommended that at the time feasible 

alternatives are discussed, participants 

be given information about agencydelivered or traditionally-delivered care 

and self-directed care, including 

licensure and certification of agency or 

other entity staff, required training and 

competency evaluation, criminal 

background checks, and the ability to 

contact the agency or entity to request 

a substitute caregiver if the initial 

caregiver does not show up. 

Response: Section 1915(j)(2)(C) of the 

Act requires States to provide an 

assurance that individuals who are 

likely to require personal care under the 

State plan, or home and communitybased services under a section 1915(c) 

waiver program, are informed of the 

feasible alternatives, where available, to 

self-directed PAS. The information on 

feasible alternatives would include 

information about agency-delivered or 

traditionally-delivered services. 

Furthermore, most participants will 

already be familiar with the agencydelivered or traditionally-delivered 

services because most will have been 

receiving them under their State plan 

personal care benefit or a section 

1915(c) waiver program. Section 

441.464(d), which implements this 

statutory provision, provides a listing of 

information that must be provided to 

participants. We believe the kind of 

information noted by the commenter is 

included in the regulation as it states 

that individuals must be given 

necessary information about selfdirection, their responsibilities and 

potential liabilities, the choice to 

receive section 1915(c) waiver services 

regardless of delivery system, and the 

option to receive and manage the cash 

amount of their budget allocation. 

Support System (§ 441.464(d)) 

Comment: One commenter suggested 

that the support system for management 

of funds should include check-writing 

and accounting as part of the training to 

those who wish to receive the cash 

option and manage their own allocation. 

Response: The extent and type of 

training needed or desired by a 

participant will vary depending upon 

the individual. We anticipate that 

participants will request any needed or 

desired training for management of 

funds, or that their representatives, 

supports brokers, or consultants will 

request this training including training 

along the lines as that noted by the 

commenter. We also anticipate that the 

State will offer the additional training 

that is desired or needed. 

Comment: One commenter noted that 

the proposed regulations lacked a 

practical plan to operationalize the 

‘‘freedom of choice of providers’’ 

requirement and asked that this 

requirement be clarified. 

Response: We believe the requirement 

to allow participants the freedom to 

choose their PAS providers will be 

operationalized when participants hire 

the person of their choosing to provide 

their PAS. However, as indicated by the 

commenter, the intent of the 

requirement is to allow participants 

freedom to choose their PAS providers 

and to clarify this requirement, we are 

revising the regulations text at 

§ 441.464(d)(2)(vii) to now read, ‘‘freely 

choose from available PAS providers.’’ 

Comment: One commenter 

recommended that the regulation be 

revised at § 441.464(d) to acknowledge 

that those participants with progressive 

dementias will need increasing support, 

as will their representatives or 

caregivers. 

Response: We believe it is not 

necessary to revise the regulation to 

indicate that persons with dementia will 


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require increasing support as their 

condition worsens. Section 

441.464(d)(3) already requires ongoing 

support throughout the period that a 

participant is self-directing their PAS 

under this option. Consequently, 

support for any worsening condition, 

like dementia, is contemplated under 

the regulations at § 441.464(d)(3). 

Comment: One commenter urged that 

CMS ‘‘encourage’’ States to contract 

with or otherwise delegate certain 

responsibilities to organizations that are 

privately accredited to perform the 

supports broker or consultant function 

and financial management services 

functions. 

Response: We believe that States are 

free to contract with entities to perform 

the required supports broker or 

consultant and FMS functions, provided 

these entities have demonstrated 

knowledge and skill in implementing 

the requirements of the self-directed 

PAS State plan option and that the 

entities meet State requirements for 

furnishing these support functions. 

Comment: One commenter 

recommended that CMS clarify that 

States or local governments do not have 

to actually provide the training needed 

by participants, but may instead 

delegate the needed supports, services, 

and training (through contractual 

means) to other entities, including 

providers. 

Response: We agree as it provides 

States with greater flexibility to manage 

this option and conforms to current 

practice with other services. 

Accordingly, we revised § 441.464(d) to 

indicate that, ‘‘States must provide, or 

arrange for the provision of, a support 

system that meets the following 

conditions.’’ 

Comment: Another commenter stated 

that participants would possibly 

hesitate to complain about their workers 

for fear of retaliation. Accordingly, the 

commenter recommended that 

participants have direct access to an 

advocate. 

Response: We agree that participants 

should have access to an advocate or 

advocacy organization and we have 

revised the rule at § 441.464(d)(2) 

(Support system) to add a new 

subsection (xv) that requires that 

participants be given information about 

the advocate or advocacy system in the 

State and how to contact the advocate 

or advocacy system. In the ‘‘Cash & 

Counseling’’ and Independence Plus 

programs, we required that an 

independent advocate or advocacy 

system be available to participants as 

part of the State’s support system. The 

independent advocate or advocacy 

system would not have to be newly 

created by the State, but could possibly 

include the State’s Protection and 

Advocacy System, the State and Local 

Long-Term Care Ombudsman Program, 

or any other existing advocate or 

advocacy system within the State’s 

aging and disability networks. This 

requirement to inform participants of 

this right would not absolve States of 

their obligation to discover and 

investigate critical incidents and 

complaints that participants and others 

report, nor would it supplant the State’s 

requirements to investigate complaints 

of abuse, neglect, or exploitation made 

to their protective services agencies. 

Moreover, the purpose of the support 

system is to assist participants in 

effectively managing their service plans 

and budgets. Accordingly, the supports 

broker should be assisting the 

participant in learning how to be an 

effective employer, including how to 

discharge a worker, if necessary. 

Annual Report and Evaluation of 

Impact (§§ 441.464(e) and 441.464(f)) 

Comment: We invited comments on 

the requirements and structure of the 

annual report required in the rule at 

section 441.464(e). Commenters 

suggested that a varying spectrum of 

information be included in the annual 

report. Commenters suggested that the 

following information be included: 

• The number of individuals selfdirecting. 

• The units of service they received. 

• The expenditures for persons 

receiving self-directed services, agencydelivered/traditionally-delivered 

services and those receiving a mix of 

modes. 

• The number of participants with 

representatives helping them. 

• The number of participants who are 

directing the State plan personal care 

services benefit. 

• The number of participants who are 

directing section 1915(c) home and 

community-based services, and type of 

waiver. 

• The average per-participant 

spending (by eligibility) category for 

those who direct their services and 

those who receive agency-delivered or 

traditionally-delivered services. 

• The services and items used by 

those self-directing and those who 

receive agency-delivered or 

traditionally-delivered services. 

• Whether LLRs are permitted to be 

paid providers. 

• Whether the State allows the 

purchase of items that increase 

independence. 

• Whether the State allows the 

delivery of services in alternative living 

arrangements. 

• The number of individuals who 

expressed interest in the option, but 

were denied, and the reason for the 

denial. 

• The number who voluntarily 

disenrolled and the reasons for the 

disenrollment. 

• The number who were 

involuntarily disenrolled and the 

reasons for the disenrollment. 

• The number of fiscal 

intermediaries. 

• The number of providers. 

• A summary of critical events 

reported by participants. 

As to the structure of the report itself, 

other commenters made the following 

suggestions: 

• The Secretary should make the 

annual reports available to the public. 

• CMS should closely monitor the 

costs associated with the self-directed 

service delivery model. 

Response: We appreciate the ideas 

that commenters submitted for the 

annual report requirements. We will 

carefully consider these comments as 

we develop guidance on the structure 

and criteria of the annual report. 

Comment: One commenter stated that 

the reporting requirements for the 

annual report were burdensome and 

overly broad. 

Response: As we noted that specific 

guidance about the annual report 

requirements will be forthcoming, it is 

unclear what requirements the 

commenter was referring to. However, 

we will take the commenter’s 

perspective into consideration as we 

develop our guidance and will try to 

impose as little burden on the States as 

possible. 

Comment: We invited comments on 

the requirements of what should be 

included in the three-year evaluation 

required in § 441.464(f). Two 

commenters had the following 

suggestions: 

• The evaluation should separately 

address the experiences of those with 

and without cognitive impairments. 

• The evaluation should address 

issues of quality of life of participants, 

family caregiver burdens and 

comparisons of the individuals with and 

without cognitive impairments. 

• The evaluation should assess the 

effectiveness of the self-directed PAS 

option, especially for populations with 

cognitive impairments. 

Another commenter suggested CMS 

streamline any evaluation requirements 

in our future guidance, given that the 

efficacy of consumer-directed services 

has been evaluated through the cash and 

counseling demonstration projects. 

Response: We thank the commenters 

for their input and we will take these 


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recommendations under consideration 

as we develop guidance on the structure 

and implementation of the evaluation. 

Comment: One commenter asked that 

CMS clarify what was meant by ‘‘overall 

impact’’ of the self-directed PAS on the 

health and welfare of participating 

individuals compared to nonparticipants. 

Response: We do not expect that 

States will need to conduct a 

‘‘scientific’’ research study and 

evaluation as was done in the national 

projects. We anticipate that our 

guidance will include minimum criteria 

that will form the basis of what we 

expect States to evaluate. We also 

anticipate that the guidance will include 

insight into the numbers of participants 

versus non-participants to be evaluated. 

After consideration of the public 

comments received, we are finalizing 

§ 441.464, with revision, to clarify that 

participants may freely choose from 

available PAS providers, that the State 

may provide under arrangement, the 

provision of support services, and that 

the State must provide information 

about advocates and the advocacy 

system in the State and how to access 

them. As explained in response to a 

prior comment, we also note changes 

were made to indicate that information 

provided to individuals and participants 

be communicated in a manner and 

language understood by the individual 

and participant and that the support 

system includes counseling about 

disenrollment, prior to when an 

individual enrolls. 

Assessment of Need (§ 441.466) 

We proposed that States must conduct 

an assessment of the participant’s needs, 

strengths, and preferences and indicated 

that the assessment information is 

crucial as it supports the determination 

that an individual requires PAS and also 

supports the development of the service 

plan and budget. 

Comment: Some commenters offered 

various suggestions on specifics for the 

assessment of need, including that it be 

standardized; performed by registered 

nurses or trained medical personnel; 

based on a prescribed scale; use a 

national standard to assess the amount 

of assistance needed; and that States be 

given latitude to develop their own 

assessment criteria and to use their 

existing assessment tools. Another 

commenter stated that the assessment 

was more burdensome than it needed to 

be. One commenter stated that CMS 

should amend the definition of 

‘‘assessment of need’’ regulations at 

§ 441.450(c) and the assessment 

requirements at § 441.466 to specifically 

add that an individual’s cognitive 

function and mental health conditions 

must be assessed, where indicated, 

including the individual’s need for 

‘‘cueing’’ or supervision. 

Response: Section 441.466 requires 

the assessment of need but does not 

specify the type of personnel that 

should perform the assessment. We 

agree that appropriately trained medical 

personnel should be trained and 

available, if an individual’s condition 

warrants a need for assessment. We also 

believe that assessing personnel should 

be trained in the person-centered 

planning and directed process and 

person-centered services, or be 

accompanied by someone who is 

trained in these areas. While we have 

not specified the instruments or 

techniques that should be used to secure 

the required information in § 441.466(a), 

information about the individual’s 

health condition and functional 

limitations must be included in the 

assessment. This should include 

information about cognitive function 

and other health information. Moreover, 

States have been given latitude to 

develop their own assessment criteria 

and tool, and we expect that States will 

use that latitude to perform the 

assessment of all of the individual’s 

physical, cognitive mental health, and 

functional needs, as required, in order 

to fulfill the overall purpose of the 

assessment which is to obtain 

information ‘‘relevant to the need for 

and authorization and provision of 

services.’’ Given the importance of the 

assessment in light of the role it plays 

in self-directed PAS under this option, 

we do not believe that the listed 

information is burdensome to either 

assess or secure. 

Comment: Two commenters 

recommended that CMS require that the 

assessment determine whether an 

individual is capable of directing his 

own care and that an individual’s ability 

to manage his own care must be 

established. The commenters suggested 

that the rule include minimum 

processes to screen out individuals 

incapable of directing their own care or 

who would require specialized medical 

treatments. 

Response: As we interpret the 

commenter’s statements, it appears they 

are suggesting individuals should not be 

given the opportunity to self-direct their 

PAS under this option simply because 

they may need or desire supports to 

effectively manage their PAS and 

budgets. We disagree with the 

commenters that exclusionary criteria 

should be used to ‘‘screen out’’ 

participants. Individuals of different 

ages and various impairments and skill 

levels have successfully directed their 

PAS when given the supports they need 

or desire. However, the assessment of 

needs, strengths, and preferences can be 

considered in determining the extent to 

which supports may be needed or 

desired. 

Comment: Two commenters stated 

that CMS should revise §§ 441.466 and 

441.468 to include in the assessment 

and the service plan, respectively, a 

requirement to identify potential 

caregivers and to assess their 

willingness and capacity to provide care 

to individuals. Additionally, the 

commenters stated that the service plan 

should not include hours of unpaid 

care. 

Response: We believe that the 

assessment of need should take into 

consideration an assessment of the 

individual’s environment, including the 

presence or absence of unpaid care and 

is one of the factors relevant to the need 

for authorization and provision of 

services. However, we do not believe 

that the regulations should be revised to 

require this, and leave this 

determination to the States. We do not 

believe that the specifics of any unpaid 

care need to be included in the resultant 

service plan. 

Comment: One commenter sought 

clarification on how States can bill for 

an assessment before a participant’s 

entry into the program. 

Response: Individuals who will be 

permitted the opportunity to self-direct 

their PAS under this new State plan 

option will already be Medicaid-eligible 

beneficiaries. Therefore, the assessment 

for self-directed PAS under this new 

State plan option can be properly 

claimed by the State. 

Comment: One commenter sought 

clarification on how the ‘‘assessment of 

need’’ differs from or relates to the 

‘‘evaluation of need.’’ 

Response: Section 1915(j)(2)(B) of the 

Act requires ‘‘an evaluation of the need’’ 

for personal care under the State plan or 

personal services under a section 

1915(c) home and community-based 

services waiver program. Section 

1915(j)(5) of the Act requires that States 

conduct an ‘‘assessment’’ of 

participants’ needs, strengths, and 

preferences for self-directed PAS. 

Section 1915(j)(2)(B) is intended to 

evaluate an individual’s need, generally, 

for personal care services or section 

1915(c) waiver services. The 

‘‘assessment of need’’ determines the 

specific needs, strengths and 

preferences of individuals in order to 

self-direct their PAS under this State 

plan option. 

After consideration of the public 

comments received, we are finalizing 

§ 441.466 without revision. 


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Service Plan Elements (§ 441.468) 

We proposed minimum requirements 

that would be included in a service 

plan. We further proposed that the 

service plan must be developed using a 

person-centered and directed planning 

process. We also proposed that the 

State’s applicable policies and 

procedures associated with service plan 

development be carried out and listed a 

minimum set of criteria that must be 

included in the State’s policies and 

procedures. Furthermore, we proposed 

that if an entity that provides other State 

plan services is responsible for service 

plan development, the State must 

describe the safeguards that are in place 

to ensure that the service provider’s role 

in the planning process is fully 

disclosed to the participant, and that 

controls are in place to avoid any 

possible conflict of interest. Finally, we 

proposed that the approved service plan 

conveys authority to participants to 

perform certain minimum tasks 

including recruiting and hiring their 

workers and determining the amount 

paid for a service, support, or item. 

Comment: Two commenters suggested 

that CMS explicitly require that the 

participant be allowed to determine the 

wages paid to their providers of PAS. 

However, other commenters disagreed 

that a participant should determine the 

amount paid for a service, support, or 

item. One commenter noted that such a 

requirement conflicts with the 

commenter’s State law that ‘‘regulates 

county wages for PAS.’’ Another 

commenter noted that such a 

requirement would limit a State’s ability 

to establish a minimum wage standard 

for personal care workers or to mandate 

a wage increase for personal care 

workers. A third commenter noted that 

the requirement appears to be in conflict 

with the collective bargaining agreement 

in the commenter’s State between the 

State and unions representing workers. 

The commenter noted that ‘‘individual 

providers are unionized and the rates of 

pay and benefits for PAS are established 

through a collective bargaining 

process.’’ The commenter asked CMS to 

clarify that a participant could 

determine the portion of the budget that 

goes to PAS, but that the collective 

bargaining agreement would govern the 

wage and benefit package for individual 

or agency PAS providers. Another 

commenter stated that applicable State 

or Federal minimum wage requirements 

should continue to apply. 

Response: We believe that the statute 

requires participants to exercise control 

over the service plan and budget and 

that includes determining the amount 

paid for services, supports, or items. 

Section 1915(j)(5)of the Act vests 

participants with decision-making 

authority over their service plans and 

budgets. The regulations at § 441.450(b) 

and § 441.468(e) implementing section 

1915(j)(5)of the Act specifically grant 

participants the authority to hire, fire, 

supervise, and manage their workers, 

and to determine the amount paid for a 

service, support, or item. We do not 

believe that State laws or collective 

bargaining agreements should hinder 

the ability of participants to determine 

the amount they pay their workers. As 

this self-directed PAS opportunity is a 

service delivery model it is not intended 

to conflict with existing laws governing 

these issues. We understand the States 

and participants would comply with 

these laws and collective bargaining 

agreements and that support and 

education, as needed, would be 

furnished to participants to inform them 

of any necessary requirements. 

Comment: One commenter stated that 

the rule should be revised to specifically 

allow a participant to request revisions 

to the service plan, based on a change 

in needs. 

Response: We agree with the 

commenter and have revised the rule at 

§ 441.468(c) to add a new subsection (8) 

to ‘‘[e]nsure that a participant may 

request revisions to a service plan, 

based on a change in needs or health 

status.’’ 

Comment: One commenter requested 

clarification of the language at 

§ 441.468(c)(6) that those responsible for 

service plan development ‘‘reflect the 

nature of the program’s target 

population.’’ 

Response: We were concerned that 

individuals developing the service plan 

have the necessary background to 

adequately develop a service plan for 

the person self-directing their PAS. In 

particular, individuals with the ‘‘lead’’ 

responsibility for service plan 

development should have knowledge 

about the population that will be selfdirecting their PAS under this State 

plan option. In keeping with the overall 

focus of a service plan, we also believe 

that those responsible for service plan 

development have demonstrated skill to 

facilitate person-centered and directed 

planning and to include personcentered services in the service plan. 

Comment: One commenter suggested 

that CMS add ‘‘cognitive status’’ after 

‘‘health status’’ in the regulation at 

§ 441.468(c)(7). 

Response: We believe that the term 

‘‘health status’’ encompasses any 

physical, cognitive, mental health, 

behavioral, or functional change 

observed or discovered that would 

necessitate a reassessment more often 

than annually, and therefore have not 

revised the regulation. 

Comment: One commenter requested 

that we revise the rule at § 441.468(c) to 

clarify that States may delegate the 

reassessment of the need for PAS to a 

sub-unit of government as long as the 

State sets guidelines, exercises 

oversight, and performs quality 

assurance and improvement activities 

over these sub-units. 

Response: We agree with the 

comment but do not believe it requires 

a revision in the regulations. States may 

delegate the reassessment of the need 

for PAS to an agency or sub-unit of 

government, provided the State retains 

all necessary administrative and 

monitoring oversight of the entity that 

performs reassessments for the State. 

We believe this will provide the State 

with the administrative option currently 

found in the provision of other 

Medicaid services. 

Comment: One commenter noted that 

a verb is missing from section 

441.468(c)(2) and should be inserted. 

Response: We have revised the rule to 

make this technical correction. 

Comment: One commenter suggested 

that the rule ‘‘include that the older 

adult and person with disabilities have 

a choice of all the provider types 

available.’’ 

Response: This new State plan option 

permits States the option to amend their 

State plans to offer individuals the 

opportunity to self-direct their PAS. As 

eligible individuals may include older 

adults and persons with disabilities, we 

do not believe a regulation change is 

necessary. Moreover, these individuals 

are free to choose to self-direct their 

PAS under the section 1915(j) State plan 

option or to remain with a traditional 

service delivery model. Individuals who 

do not wish to self-direct their PAS 

under this State plan option may 

consider other models of care available 

to them and for which they are eligible, 

such as the Program of All Inclusive 

Care for the Elderly (PACE). As required 

by both statute and regulations, a State’s 

feasible alternatives, if applicable, 

should be discussed with individuals 

before they enroll in this new State plan 

option. 

After consideration of public 

comments received, we are finalizing 

§ 441.468, with revision, to correct a 

technical error and to provide that 

participants may request a change to the 

service plan, as needed. 

Service Budget Elements (§ 441.470) 

We proposed that a service budget 

must be developed and approved by the 

State based on the assessment of need 

and service plan. We also proposed 


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certain budget elements that govern the 

service budgets, including that the 

participants have knowledge about the 

specific dollar amount available for 

their PAS; how they may adjust the 

budget plan; the procedures that govern 

how a person, at the election of the 

State, may reserve funds to purchase 

items that increase independence or 

substitute for human assistance; how a 

person may use a discretionary amount, 

if applicable, to purchase items not 

otherwise delineated in the budget; and 

how participants are afforded the 

opportunity to request a fair hearing if 

a participant’s request for a budget 

adjustment is denied or the amount of 

the budget is reduced. 

Comment: One commenter thought 

that we needed to provide more detail 

on the steps used in developing the 

service budget. The commenter was also 

concerned that some States may 

‘‘discount’’ a participant’s service 

budget as a cost-cutting tool. The 

commenter stated that it could result in 

inadequate provision of services. 

Response: We believe that the 

regulations at §§ 441.450 and 441.470 

provide ample detail and give sufficient 

guidance in the development of service 

budgets and no further detail is 

necessary. There are numerous 

resources that can provide further 

guidance to States in the development 

of service budgets and we are available 

to provide technical assistance if 

necessary. We agree with the comment 

that a person’s budget should not be 

‘‘discounted’’ in order for a State to cut 

costs and do not believe that it would 

be proper for States to do so. 

Comment: One commenter 

recommended that each State be 

required to develop a methodology for 

the timely recoupment of unused funds 

and that these funds be used for the selfdirected PAS option. 

Response: We believe that it is 

important for States to have a procedure 

to timely recoup unused funds. We 

believe that § 441.464(a), that requires 

States to assure the financial 

accountability of funds expended under 

this State plan option, would 

encompass the recoupment of unused 

funds. Accordingly, we are not adopting 

the commenter’s suggestion. 

Comment: Two commenters suggested 

that CMS add the language, ‘‘earmarked 

for savings,’’ to the regulations text at 

§ 441.470(e) to permit individuals to use 

a discretionary amount of their budget 

to purchase items not otherwise 

delineated in the budget plan or 

‘‘earmarked for savings,’’ since that is 

the language we used in the preamble. 

Response: We agree and have revised 

the regulation at § 441.470(e) to indicate 

that the discretionary amount could be 

used to purchase items not otherwise 

delineated in the budget plan or 

‘‘reserved for permissible purchases.’’ 

We believe the phrase ‘‘reserved for 

permissible purchases’’ better reflects 

this concept rather than ‘‘earmarked for 

savings’’ because permissible purchases, 

under this self-directed PAS State plan 

option, are those supports, goods, 

equipment, or supplies that increase 

independence or substitute for human 

assistance, and are purchased with the 

amount of funds that a participant is 

able to save or ‘‘reserve’’. 

Comment: One commenter suggested 

that we eliminate the requirements in 

the regulation at § 441.470(a) and (b) 

with regard to informing the participant 

of the amount of the budget and 

conveying that information before the 

service plan is finalized. 

Response: We disagree with the 

commenter. The requirement in 

§ 441.470(a) that participants be 

informed of the ‘‘specific dollar amount 

a participant may utilize for services 

and supports’’ is crucial so that the 

participant, with assistance as needed or 

desired, can develop a service plan and 

budget plan that properly reflects the 

participant’s needs, and the way in 

which any reserve or discretionary 

funds, if permitted by the State, will be 

budgeted. Section 441.470(b) is a 

requirement that describes only that the 

participant will be told, at the time the 

service plan is developed, how the 

participant will learn of the service 

budget amount, once it is determined. 

The requirement was not meant to 

prescribe a particular process. 

Comment: One commenter requested 

clarification on whether an individual 

could purchase services that are not 

currently covered within the State 

plan’s definition of personal care 

services such as supervision and cueing. 

Response: When a State offers the 

opportunity to self-direct State plan 

PAS, we do not believe it would be 

permissible for participants to purchase 

services that are not included within the 

State’s definition of their PCS benefit. 

However, the statute and regulations at 

§ 441.470(d) allow a State, at the State’s 

election, to offer participants the 

opportunity to reserve funds to 

purchase items that increase 

independence or substitute for human 

assistance, to the extent that 

expenditures would otherwise be made 

for the human assistance, including 

additional goods, supports, services, or 

supplies. If this option is offered by the 

State, we believe that a participant can 

purchase goods, supports, services, or 

supplies that are not included within 

the definition of the State’s PCS benefit. 

Comment: A commenter requested 

clarification on how States are supposed 

to review and approve the service 

budgets of PAS participants when the 

participants are free to determine the 

amount they will be spending for goods 

and services. 

Response: Under the self-directed 

service delivery model, individuals 

determine the rate or amount paid for 

their services, supports, and items. 

Moreover, while individuals direct the 

decisions about the purchases to be 

made with their service budget, they are 

still responsible for remaining within 

the budgeted amount noted in their 

budget plan. To clarify, we intended 

that States review and approve the 

budget plan to ensure that the budget 

plan is not exceeding the budget 

amount, that the participant’s budget 

plan is in keeping with the assessment 

of need and the identified needs in the 

service plan, and because we believe it 

is an important step to ensure the 

financial integrity of the self-directed 

State plan option. 

Upon consideration of the public 

comments received, we are finalizing 

§ 441.470, with revision for a technical 

change and to note that the service 

budget may include a discretionary 

amount, if applicable, to purchase items 

not otherwise delineated in the budget 

or reserved for permissible purchases. 

Budget Methodology (§ 441.472) 

We proposed that the State’s budget 

methodology to determine a 

participant’s service budget meet certain 

criteria and generally tracked the statute 

at section 1915(j)(5)(D). We also 

proposed that the State have procedures 

in place to safeguard participants when 

the budgeted amount is insufficient to 

meet a participant’s needs. We also 

proposed that the State have a method 

of notifying participants of the amount 

of any limit that applies to a 

participant’s self-directed PAS and 

supports. We also proposed that the 

budget may not restrict access to other 

medically necessary care and services 

furnished under the plan and approved 

by the State but not included in the 

budget. 

Comment: One commenter requested 

that CMS clarify what is intended by the 

requirement, ‘‘The State’s method 

includes a calculation of the expected 

cost of the self-directed PAS and 

supports, if those services and supports 

were not self-directed.’’ 

Response: As persons eligible for selfdirected PAS must already be eligible 

for and receiving the optional State plan 

personal care services benefit or services 

in a section 1915(c) waiver, the amount 

of the funds available to a participant 


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for their self-directed PAS ‘‘budget’’ is 

not to exceed the amount that the State 

would pay for the services and supports 

if those services and supports were 

provided under the traditional service 

delivery model. 

Comment: Several commenters 

requested that CMS clarify what is 

meant when States are required to have 

a procedure to safeguard participants 

when budgeted service amounts are 

insufficient to meet participants’ needs. 

One commenter asked whether the 

procedures to safeguard participants 

included the following: Appeal rights to 

challenge benefit levels that participants 

perceived to be inadequate; 

institutionalization; additional financial 

resources when a participant states that 

the funds or services are insufficient; or 

whether CMS expects participants to 

forego needed services. One commenter 

suggested that we revise the regulation 

at § 441.472 to indicate that service 

budget increases may be appropriate 

when it can be shown that some change 

in a participant’s medical condition, 

functional status, or living arrangement 

requires it. 

Response: It is important to note that 

at any time a reassessment is performed, 

ultimate decision-making authority for 

the amount of services authorized rests 

with the State, according to the State’s 

medical necessity criteria applied 

against an individual’s assessed needs. 

Therefore, we have revised § 441.472(a) 

to indicate that the budget methodology 

is established by the State in such a way 

as to ensure the State’s role in service 

authorization. Section 441.470(f) 

permits participants to request a fair 

hearing if a participant’s request for a 

budget adjustment is denied or the 

amount of the budget is reduced. We 

believe that this section will encompass 

a situation where a participant perceives 

that the amount of the service budget is 

inadequate to meet the participant’s 

needs. However, the preferred process 

in such a situation would be for a 

discussion to initially occur between the 

participant, the participant’s 

representative, if any, the supports 

broker or consultant or other members 

of the service planning team to explore 

an informal resolution to the 

participant’s concern. We believe that a 

reassessment of the participant’s need 

for PAS may be a proper solution to the 

participant’s concern. We do not 

necessarily agree with the other 

alternatives mentioned by the 

commenters. Institutionalization is not 

an acceptable option in this case, as the 

intent of the section 1915(j) provision is 

to avoid institutionalization by 

strengthening supports to individuals. 

We also do not support any process 

where participants forego needed 

services; rather, we would expect that 

the PAS provider, the representative, if 

any, the FMS entity or the supports 

broker or consultant would discover 

whether a reassessment is indicated and 

report this information to the State. As 

noted by the commenter, because 

reassessment is an appropriate step 

when the participant or representative, 

if any, feels the budgeted service 

amount is insufficient to meet a 

participant’s needs, we have revised 

§ 441.472 to add a new subsection (e) to 

indicate that a State must have a 

procedure to adjust a budget when a 

reassessment indicates a change in the 

participant’s medical condition, 

functional status, or living situation. 

Comment: One commenter 

recommended that we delete the word 

‘‘medically’’ from the language in the 

rule at § 441.472(d). The commenter was 

concerned that the word ‘‘medically’’ 

would restrict a participant to the 

receipt of care or services related solely 

to a participant’s medical condition or 

disease. 

Response: Section 441.472(d) reflects 

the statutory language which states that, 

‘‘The budget may not restrict access to 

other medically necessary care and 

services furnished under the plan and 

approved by the State but not included 

in the budget.’’ Moreover, we believe 

that the term ‘‘medically necessary’’ is 

a commonly recognized term of art that 

encompasses all the services, supplies, 

or equipment that a State includes 

under its State plan, waiver, or other 

Medicaid programs, and for which an 

eligible individual has been determined 

to need. 

Comment: One commenter 

recommended that the rule include an 

incentive system for payment to the 

counseling and fiscal agencies. 

Specifically, the commenter 

recommended that a higher, one-time 

payment be made to the counseling or 

FMS entity when an individual has 

selected the option, followed by a onetime payment when the spending plan 

is developed, and finally, by a monthly 

fee after the individual receives the 

budget allowance. 

Response: We believe that States 

should design the approach for payment 

to FMS entities in a manner that 

comports best with the State’s fiscal 

processes and procedures. 

Comment: One commenter indicated 

that there are insufficient standards in 

the rule to ensure that budgets will not 

be arbitrarily reduced for participants 

who self-direct their PAS. The 

commenter further suggests that States 

should not assume that all participants 

will be able to secure services at a lower 

cost than through the traditional service 

delivery model. 

Response: We believe that there are 

sufficient standards in the regulations to 

ensure that budgets will not be 

arbitrarily reduced. The regulations 

require that the budget methodology be 

consistently applied to participants and 

that the budgeted amount be based on 

the assessment of the participant’s 

needs, strengths, and preferences and 

the service plan. We believe that all 

these are safeguards against 

participants’ budgets being arbitrarily 

reduced. 

Comment: One commenter questioned 

the need for a budget methodology if 

participants are free to purchase what 

they need outside of any State-imposed 

pricing methodology. The commenter 

further noted that it seemed 

inappropriate to claim that participants 

would be free to determine the pay rate 

for their providers of PAS when they 

have no control over the total budget 

amount. 

Response: We believe the commenter 

has confused the budget methodology 

with the ability of the participant to 

determine the amount paid for a service, 

support, or item. To clarify, among other 

things, the budget methodology is for 

the purpose of ensuring that the budget 

allocation for all participants is 

objective; evidenced based; utilizes 

valid, reliable cost data; is applied 

consistently to participants; is open to 

public inspection; and, includes a 

calculation of the expected cost of the 

self-directed PAS and supports, if those 

services and supports were not selfdirected. Under the traditional service 

delivery model, the amount that the 

State has budgeted for an individual is 

based on these same factors. The only 

difference is that the participant in this 

self-directed model is directing how that 

amount will be used to purchase the 

services, supports, or items to meet his 

or her needs. 

Upon consideration of the public 

comments received, we are finalizing 

§ 441.472, with revision, to indicate that 

the budget methodology is established 

by the State in such a way as to ensure 

the State’s role in service authorization, 

and to require the State to have a 

procedure to adjust a budget when a 

reassessment occurs and necessitates a 

change. 

Quality Assurance and Improvement 

Plan (§ 441.474) 

We proposed that the State must 

provide a quality assurance and 

improvement plan that describes the 

State’s system of how it will perform 

activities of discovery, remediation, and 

quality improvement for self-directed 


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PAS. We proposed that the quality 

assurance and improvement plan 

describe the system performance 

measures, outcome measures, and 

satisfaction measures that the State must 

use to monitor and evaluate the selfdirected State plan option. 

Comment: One commenter suggested 

that we require the State to create a log 

of all critical events reported by 

participants. 

Response: We do not accept the 

commenter’s suggestion because we 

believe that the State would already be 

required to track the critical incidents 

reported by participants as part of the 

State’s quality assurance and 

improvement (QA/QI) plan under 

§ 441.474. Section 441.474 requires a 

State to have a QA/QI plan that includes 

a system to discover critical incidents or 

events that may pose harm to 

participants. Under such a system, 

critical incidents or events reported by 

participants must be tracked, and the 

results analyzed and evaluated, so that 

quality improvements that are needed to 

ensure participant health and welfare 

are continuously made under the selfdirected PAS option. 

Comment: One commenter indicated 

that State plans must address how the 

State will monitor quality for those with 

progressive, degenerative diseases (for 

example, Alzheimer’s disease), 

developmental disabilities, or mental 

health conditions. The commenter 

stated that special attention to the 

experiences of those with cognitive 

impairments is critically important in a 

program that relies on participants to 

manage their own services. 

Response: We agree that a State’s QA/ 

QI plan should take into consideration 

the changing needs of particular 

populations that are self-directing their 

PAS under this option. For example, a 

QA/QI plan could include adjustments 

for more frequent phone or face-to-face 

monitoring if the participants’ 

conditions change. However, we do not 

believe a change to the regulation is 

necessary as we will evaluate a State’s 

QA/QI plan during the review of the 

section 1915(j) State plan application. 

Comment: Some commenters 

suggested specific performance, 

outcome and satisfaction measures be 

added as requirements for the QA/QI 

plan. 

Response: We appreciate the 

commenters’ input. Section 441.474 

already requires that the QA/QI plan 

describe the system performance 

measures, outcome measures, and 

satisfaction measures that the State must 

use to monitor and evaluate the selfdirected State plan option. We believe 

requiring certain measures and 

indicators at this time may be premature 

as we currently have an initiative 

underway to evaluate whether certain 

quality measures and indicators should 

apply to all Medicaid programs. To 

assist us in determining which quality 

measures and indicators are generally 

being used in Medicaid, we are revising 

§ 441.474(b) to indicate that quality of 

care measures must be made available to 

CMS upon request. Moreover, if we do 

identify such quality measures, we may 

wish to apply them to the self-directed 

PAS State plan option. In light of this 

possibility, we have revised § 441.474(b) 

to clarify that quality of care measures 

must be made available to CMS upon 

request and note that the QA/QI plan 

must include indicators approved or 

prescribed by the Secretary. 

Comment: One commenter 

recommended that CMS revise the 

regulations to reflect the statutory 

language which requires only 

‘‘appropriate quality assurance and risk 

management techniques’’ instead of the 

current requirements for a quality 

assurance and improvement plan and 

the system performance measures, 

outcome measures, and satisfaction 

measures. 

Response: We do not agree with the 

commenter. Section 1915(j)(5)(E) of the 

Act requires States to provide 

appropriate quality assurance 

techniques to establish and implement 

the PAS service plan and budget. As we 

stated in the proposed regulation, such 

techniques must recognize the roles and 

responsibilities in obtaining services in 

a self-directed manner and assure the 

appropriateness of such plan and budget 

based upon the participant’s resources 

and capabilities. For approximately 30 

years, we have witnessed an increasing 

number of Medicaid recipients who 

want to move into or remain in the 

community in order to receive 

community-based care and services. 

Simultaneously, we have seen the 

growth in the number of individuals 

who want to self-direct their 

community-based care and services. 

States face the challenge of how to 

ensure each participant’s health and 

welfare while also respecting individual 

autonomy and choice. We believe that 

this challenge can be met with an 

effective QA/QI plan that incorporates 

performance of discovery, remediation, 

and quality improvement activities and 

includes system performance measures, 

outcome measures, and satisfaction 

measures. Accordingly, we believe that 

the appropriate techniques must reflect, 

at a minimum, the need for discovery, 

remediation, and quality improvement 

activities and system performance 

measures, outcome measures, and 

satisfaction measures as noted in the 

regulations at § 441.474(a) and (b). 

Comment: One commenter 

recommended that we require a broad 

backup plan to account for situations 

where budgeted funds are prematurely 

depleted. Additionally, the commenter 

recommended a reassessment of an 

individual’s ability to participate in the 

State plan option if the budget plan is 

not being followed. 

Response: We believe that by ‘‘broad 

backup plan’’, the commenter means 

that we should require States to have a 

‘‘template’’ prepared in advance that 

would address what to do in situations 

where budgeted funds are prematurely 

depleted. We disagree with the 

commenter because we believe that a 

backup plan should be individualized 

and tailored to a participant’s identified 

critical contingencies or incidents that 

would pose a risk of harm to the 

participant’s health or welfare. As stated 

previously, there are several options 

that a State may employ to safeguard 

participants who have prematurely 

spent the funds in their service budgets, 

such as the provision of additional 

information or counseling on budgeting. 

Moreover, a reassessment of an 

individual’s ability to self-direct their 

PAS if the budget plan is not being 

followed, may not be appropriate in all 

situations. Again, it would depend on 

whether additional information or 

training has helped the participant to 

stay within the budget restrictions. 

However, we agree with the commenter 

insofar as a change in the participant’s 

health status may be the cause of the 

participant’s inability to stay within 

budget restrictions. As we noted 

previously in response to a prior 

comment, in such a situation, a 

reassessment of the participant’s health 

status would be appropriate. 

After consideration of public 

comments received, we are finalizing 

§ 441.474, with revision, to require that 

quality measures be available to CMS 

upon request and include indicators 

approved or prescribed by the Secretary. 

Risk Management (§ 441.476) 

We proposed that the State must 

specify the risk assessment methods it 

uses to identify potential risks to the 

participant and the tools or instruments 

it uses to mitigate identified risks. We 

further proposed that the State must 

ensure that each service plan includes 

the risks that an individual is willing 

and able to assume, and the plan for 

how identified risks will be mitigated. 

Finally, we proposed that the State must 

ensure that the risk management plan is 

the result of discussion and negotiation 

among the persons designated by the 


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State to develop the service plan, the 

participant, the participant’s 

representative, if any, and others from 

whom the participant may seek 

guidance. 

Comment: One commenter urged that 

CMS require States to specify how they 

will assess and address potential risks 

for those with impaired cognition. 

Response: The statute and the 

regulations note that States must specify 

risk assessment methods, tools, or 

instruments the State uses to mitigate 

identified risks, and a plan for how risks 

will be mitigated. We do not believe that 

it is necessary to specify how persons 

with impaired cognition will be 

assessed and how the potential risks for 

these individuals will be addressed. As 

stated in the proposed regulations, how 

much risk an individual is willing and 

able to assume is a matter of discussion 

and negotiation among the persons 

designated by the State to develop the 

service plan, the participant, the 

participant’s representative, if any, and 

others from whom the participant may 

seek guidance. This process provides 

flexibility to the State and to the 

participants to reflect the participants’ 

needs and resources in the service plan 

and budget plan. We believe this 

process would adequately address 

situations where participants have 

impaired cognition and have not revised 

the regulations. 

Comment: In discussing the tools that 

may be used, we invited comment on 

whether criminal background checks 

should be mandatory under the State 

plan option or left to the discretion of 

the States, as is the current practice in 

programs that offer self-direction. 

Several commenters provided 

comments on whether criminal 

background checks should be 

mandatory with one commenter stating 

we should include national background 

checks for any provider of PAS that has 

one-to-one contact with participants. 

Other commenters offered suggestions 

on how the background checks should 

be reimbursed. Some commenters 

indicated that an individual’s spouse, 

parent, close relative, or friend who is 

to be hired as a provider of PAS should 

not have to undergo a criminal 

background check. Some commenters 

also thought that the individual should 

retain the decision of whether to hire a 

person whom the individual or 

participant knows to have, or discovers 

to have, a criminal background. 

Response: We recognize the 

commenters’ perspective that 

recommended that criminal background 

checks be mandatory under this State 

plan option. However, we agree with the 

commenters who suggested that 

criminal background checks remain at 

the State’s discretion and are not 

revising § 441.476. Section 441.476 

requires States to specify any tools or 

instruments it uses to mitigate identified 

risks. We have not prescribed the tools 

or instruments that States must use 

because States should have the 

necessary flexibility to use the 

instruments or tools that they have 

found best meets the needs of the 

participants. These tools may include 

the use of criminal and worker 

background checks and States have the 

option to determine who falls within the 

scope of such background checks. In 

addition, if States make criminal or 

worker background checks available as 

a tool to mitigate risks to participants, 

then States would bear the expense of 

the criminal or worker background 

checks it performs on behalf of 

participants. We further believe that the 

individual, or individual’s 

representative, must retain the authority 

to decide who the participant will hire 

to provide their PAS as this decision as 

to who to employ is inherent in selfdirection. 

Comment: One commenter suggested 

that CMS establish procedures for 

developing negotiated risk agreements. 

Moreover, the commenter stated that 

CMS should require State Medicaid 

programs to develop appropriate 

linkages with their State long-term care 

ombudsman and agencies that 

administer protective service to ensure 

that there are safeguards against abuse. 

Response: Section 441.476(b) requires 

a State to specify the tools or 

instruments it uses to mitigate identified 

risks. As noted in the proposed 

regulation, we do not prescribe the tools 

or instruments that States must use 

because States should have the 

flexibility necessary to use the 

instruments or tools they have found 

best meet the needs of the participants. 

We noted that examples of risk 

management tools or instruments might 

include criminal and worker 

background checks; job descriptions 

that clearly set forth the roles and 

responsibilities of participant, workers, 

representatives, and all others involved 

with supporting the participant; and the 

use of individual risk agreements that 

permit the participant to acknowledge 

and accept the responsibility for 

addressing certain types of risks. 

Accordingly, we do not believe that 

CMS should establish procedures for the 

development of negotiated risk 

agreements. Moreover, while we 

encourage States to develop linkages 

with their State long-term care 

ombudsman program, we do not believe 

we should require these relationships. 

We have previously addressed the need 

for access to an independent advocate or 

advocacy organization in our response 

to the comments under § 441.464(d) 

(Support system) that we think would 

encompass programs such as the State 

long-term care ombudsman program and 

protective services programs that exist 

in the State. We assume and believe that 

States already have agencies that 

administer protective services to ensure 

that there are safeguards against abuse. 

Upon consideration of public 

comments received, we are finalizing 

§ 441.476 without modification. 

Qualifications of Providers of Personal 

Assistance (§ 441.478) 

We proposed that States have the 

option to permit participants to hire any 

individual capable of providing the 

assigned tasks, including legally liable 

relatives, as paid providers of the PAS 

identified in the service plan and 

budget. We proposed that participants 

retain the right to train their workers in 

the specific areas of personal assistance 

needed and to perform the needed 

assistance in a manner that comports 

with the participant’s personal, cultural 

or religious preferences. Finally, we 

proposed that participants retain the 

right to establish additional staff 

qualifications based on participants’ 

needs and preferences. 

Comment: We invited comment on 

whether a minimum age requirement 

should be required for the providers of 

PAS. Three commenters opposed the 

imposition of a minimum age 

requirement in order to maximize the 

degree of flexibility participants have 

over their workers who will furnish the 

participant’s PAS. However, one 

commenter cautioned that not including 

a minimum age requirement may run 

afoul of a State’s child labor laws. 

Further, one commenter stated that the 

focus should be on whether the worker 

is qualified to furnish the service in the 

service plan. Several commenters 

suggested that CMS demand some 

minimum training, worker 

qualifications, and competency 

evaluation requirements. 

Response: We agree with the 

commenters that we should not impose 

a minimum age restriction on providers 

of PAS; rather, the focus should be on 

whether the worker is qualified to 

furnish the service in the service plan 

according to the participant’s personal, 

cultural, and religious preferences. 

As self-directed PAS may include 

services beyond personal care, any 

minimum training, worker 

qualifications, or competency 

evaluation requirements would have to 

be tailored to each of the different 


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provider types that will potentially 

furnish self-directed PAS under this 

option. We do not believe that 

recreating a system of minimum 

training, worker qualifications, and 

competency evaluation requirements 

would be appropriate because it would 

remove the authority vested in 

participants to train their providers of 

PAS and to determine their 

qualifications. 

We agree that participants should 

have access to additional training for 

their workers, as needed or desired, 

provided by or through the State. In this 

regard, we have revised the regulations 

at § 441.450(b) to permit participants to 

have access to other training provided 

by or through the State so that their PAS 

providers can meet any additional 

qualifications that participants think are 

needed or desired. We also believe that 

§ 441.478(b) should include this 

requirement and have revised that 

section similarly. The participant’s 

supports broker or consultant, as needed 

or desired, should assist the participant 

in locating and accessing additional 

training. 

Comment: One commenter 

recommended that all individual 

assessments include a determination of 

the ability of the individual to 

adequately train their PAS provider. 

Response: We believe that the 

regulations afford sufficient supports to 

the participant, such as, the 

requirements that ongoing information 

or counseling be provided to 

participants, or the use of 

representatives, as needed, that would 

enable participants to adequately 

communicate their needs to a PAS 

provider and to train their PAS provider 

in how to meet those needs. Therefore, 

we are not adopting the commenter’s 

suggestion. 

Upon consideration of the public 

comments received, we are finalizing 

§ 441.478, with modification to permit 

access to training provided by the State 

to allow the PAS providers to meet any 

additional qualifications required or 

desired by the participant. 

Use of a Representative (§ 441.480) 

We proposed that States may permit 

participants to appoint a representative 

to direct the provision of self-directed 

PAS on their behalf and listed the types 

of representatives that are permissible. 

We also proposed that States could 

mandate a representative, using criteria 

approved by CMS, if the participant has 

demonstrated, after additional 

counseling, information, training or 

assistance, the inability to self-direct 

PAS. We further proposed that a person 

acting as a representative for a 

participant receiving self-directed PAS 

is prohibited from acting as a provider 

of self-directed PAS to the participant. 

Comment: Two commenters 

recommended that use of a 

representative should be required in the 

rule. In contrast, other commenters 

urged that CMS amend the rule to 

permit a representative to be ‘‘an 

individual chosen by the participant’’ 

and to permit a spouse or significant 

other to act as a representative. One 

commenter noted that it is inappropriate 

for the participant to appoint a parent or 

guardian as the representative, since 

this is the fundamental responsibility of 

a parent or guardian. Several other 

commenters stated that the rule should 

permit representatives to be paid 

providers of PAS to allow for situations 

where workers are in short supply, or 

where a representative is the 

participant’s preferred or only available 

provider. One commenter was 

concerned about the use of ‘‘legally 

liable relatives’’ as paid providers of 

PAS because the situation would be 

susceptible to abuse and because the 

potential exists for violations of State 

Nurse Practice Acts that delegate skilled 

nursing care to unpaid but not paid 

caregivers. Another commenter 

suggested that we add a definition of 

‘‘representative’’ to the rule. One 

commenter suggested that the language 

at § 441.480, with respect to who may be 

a representative, should be moved to the 

definitions section to strengthen the 

protections embodied in the regulatory 

language. 

Response: We disagree that use of a 

representative should be required as this 

could be overly prescriptive in 

situations where an individual is able to 

indicate preferences or manage his own 

services and budgets with assistance. 

We further note that while spouses are 

not expressly included, they are not 

specifically excluded in the regulations, 

and would likely be an individual 

recognized by State law to act on the 

participant’s behalf. We believe that 

other representatives could be permitted 

by the State. 

The role of the representative is to 

assist individuals in making decisions 

with respect to the planning, 

development, management, and 

direction of their service plans and 

budget plans. We encourage States to 

recognize and permit other 

representative relationships, so that 

participants can exercise greater 

flexibility in their choice of who will 

assist them with their decisions. 

We continue to believe that 

representatives should not be paid 

providers of PAS. While it potentially 

limits a participant’s choice of 

representative or provider, we think it is 

important to avoid any potential conflict 

of interest. We also learned from the 

experiences of the States participating 

in the original ‘‘Cash & Counseling’’ 

demonstration, that it is important to 

include this limitation in order to avoid 

the situation of a representative 

overseeing or making decisions that 

directly impact them, such as approving 

their own rate of pay, their own 

timesheets, and the like. Accordingly, in 

order to promote participant health and 

welfare and program integrity, and to 

ensure that participants actually receive 

their authorized PAS, we included this 

necessary protection in the regulation at 

§ 441.480(b). Moreover, we believe that 

there are sufficient participant and 

programmatic protections in the 

regulations that would detect concerns 

about violations of Nurse Practice Acts. 

Finally, we disagree that the rule should 

be amended to add those who may be 

a representative, or that a separate 

definition is necessary, because we 

believe that representative eligibility 

will vary under State law and agency 

procedure. Therefore, we have left the 

regulations unchanged. 

Comment: One commenter suggested 

that the rule address the ability of 

potential representatives to freely 

choose or to decline to perform the tasks 

associated with being the representative; 

to understand their responsibilities; and 

to get support, training, and counseling 

as needed to carry out their 

responsibilities. 

Response: We do not believe that the 

details of the representative’s training 

and understanding of their 

responsibilities is needed as we believe 

that the States will perform this 

function as part of the pre-enrollment 

counseling and as necessary on an 

ongoing basis. 

Comment: One commenter suggested 

that CMS require a representative 

agreement that lists the tasks the 

representative agrees to perform on 

behalf of the participant. 

Response: We encourage the 

voluntary use of an agreement if it 

would be beneficial to the participant 

and the representative, but do not 

believe a requirement for such an 

agreement should be dictated. We 

believe that some representatives who 

are clear about their tasks and 

responsibilities would find such a 

requirement unnecessary and 

burdensome. We further believe that 

States should have the discretion 

whether to impose such a requirement 

on representatives of participants selfdirecting their PAS under this State 

plan option. 


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Upon consideration of public 

comments received, we are finalizing 

§ 441.480 without modification. 

Permissible purchases (§ 441.482) 

We proposed that participants may, at 

the State’s option, use their service 

budgets to pay for items that increase a 

participant’s independence or substitute 

for human assistance, to the extent that 

expenditures would otherwise be made 

for the human assistance. We also 

proposed that the services, supports, 

and items that are purchased with a 

service budget must be linked to an 

assessed participant need established in 

the service plan. 

Comment: One commenter stated that 

purchases must relate back to an 

assessed need and must be restricted to 

those that relate to the individual’s 

medical condition. Furthermore, this 

commenter stated, individuals in 

traditional models of service delivery 

should have access to the same 

purchase options as participants in the 

self-directed PAS State plan option, that 

is, to purchase items that increase 

independence or substitute for human 

assistance. 

Response: Section 441.482 indicates 

that permissible purchases must be 

linked to an assessed participant need 

established in the service plan. We do 

not agree that purchases must relate to 

a participant’s ‘‘medical condition’’ 

because such a limitation may be overly 

prescriptive and preclude the purchase 

of some items that may substitute for 

human assistance, such as a microwave. 

However, we have revised the 

regulation further to allow that 

permissible purchases must be related 

to an assessed participant need or goal 

established in the service plan. As 

service plans must be person-centered 

and identify participants’ preferences, 

we believe that service plans often 

include participants’ goals such as the 

desire to live in their own home. 

Therefore, if a purchase would assist a 

participant to live in their own home, 

thereby becoming more independent, 

then the purchase of an item that would 

increase independence could be 

consistent with the requirements in the 

regulation. In separate guidance, we will 

issue further direction on permissible 

purchases. As to the commenter’s 

suggestion that individuals who receive 

their services in a traditional service 

delivery model should have the option 

to purchase items that increase 

independence or substitute for human 

assistance, we believe that the statute 

directs this option only to participants 

of the self-directed PAS State plan 

option. 

Comment: One commenter noted that 

the use of the term ‘‘medically 

necessary’’ in the preamble is not 

correct in the context of permissible 

purchases. These purchases could be 

consistent with a service plan, but not 

strictly ‘‘medically necessary.’’ 

Response: We agree with the 

commenter that in the context of 

permissible purchases, the item need 

not be medically necessary. We are 

clarifying this point here and will take 

this comment into consideration as we 

develop the future guidance on 

permissible purchases. 

Comment: One commenter supported 

the concept of allowing participants to 

use funds for permissible purchases but 

cautions that doing so allows for more 

opportunities for abuse. The commenter 

recommended more oversight to ensure 

the fiscal integrity of the State plan 

option and accountability for the funds. 

Response: Section 441.464(a) requires 

assurances that necessary safeguards be 

taken to protect the health and welfare 

of individuals furnished services under 

the State plan option and to assure the 

financial accountability for funds 

expended for self-directed services, 

which includes permissible purchases. 

We believe this provides adequate 

oversight over the fiscal accountability 

of the funds and protects the overall 

integrity of this option. 

Upon consideration of public 

comments received, we are finalizing 

§ 441.482 with revision to note that 

permissible purchases must be linked to 

a participant need or goal established in 

the service plan. 

Financial Management Services 

(§ 441.484) 

We proposed that States may provide 

FMS themselves to participants selfdirecting their PAS, or employ another 

FMS entity to provide these services. 

Participants utilizing the cash option 

who directly perform those functions 

themselves would not require this 

service. We proposed that the FMS 

entity must comply with all applicable 

requirements of the IRS. We further 

proposed that States must provide 

oversight of FMS by performing certain 

prescribed functions. We also proposed 

the specific functions that FMS entities 

must perform and proposed that States 

not employing an FMS entity must 

perform those functions. Finally, we 

proposed that States will be reimbursed 

for the cost of FMS, either provided 

directly or through a financial 

management entity, at the 

administrative rate of 50 percent to 

reflect the statutory requirement for 

reimbursement of FMS. 

Comment: One commenter stated that 

the requirement for FMS would add 

considerable costs to a State’s Medicaid 

budget and also add to the oversight 

responsibilities borne by a State. 

Response: We acknowledge that 

States may experience an initial outlay 

of funds to provide, or employ an entity 

to provide, the FMS required by this 

rule. This may be particularly true when 

a State has not previously offered a selfdirection opportunity that included a 

participant’s authority over their 

workers and services, as well as a 

service budget. However, we do not 

believe an FMS option would 

significantly add to States’ fiscal and 

administrative responsibilities, as States 

must already provide programmatic and 

financial oversight of their Medicaid 

programs, including the functions to be 

performed by the FMS entity. 

Comment: One commenter asserted 

that agencies who are supposed to serve 

as ‘‘fiscal intermediaries’’ are, in reality, 

functioning as home care agencies 

without any regulatory oversight. One 

commenter cautioned that the FMS 

entity cannot be allowed to operate 

independently without oversight by the 

State and without oversight 

responsibility for the expenditures made 

by a participant. 

Response: We believe the commenter 

has misunderstood the role of the FMS 

entity. We note that the term ‘‘fiscal 

intermediary’’ may be interpreted 

differently by different people and 

States. ‘‘Fiscal intermediaries’’ are not 

necessarily synonymous with financial 

management services. Section 441.484 

sets forth minimum mandatory 

functions that must be performed by the 

FMS entity and the State’s 

responsibilities for oversight of the FMS 

entity. Accordingly, we believe that the 

rule has sufficient safeguards to ensure 

that the FMS responsibilities are 

properly carried out and supervised. 

Comment: One commenter thought 

that reimbursing the FMS entity at the 

50 percent administrative rate was 

improper in situations when the State 

offers an ‘‘agency with choice’’ model. 

The commenter explained that under 

this model, the participant may choose 

to delegate certain functions to the 

agency such as recruitment, initial and 

on-going training, and the identification 

and management of backup services. 

These functions should be reimbursed 

at the FMAP rate. 

Response: Financial management 

services, regardless if performed by a 

stand-alone FMS entity or one that is 

part of an agency with choice model, 

will be reimbursed at the statutorilyrequired 50 percent administrative rate. 


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Comment: One commenter suggested 

that we add a requirement to 

§ 441.484(c) that the FMS entity must 

maintain a separate account for each 

participant’s budget. 

Response: This is already a 

requirement for the FMS entity as noted 

in Section 441.484(c)(3). 

Upon consideration of the public 

comments received, we are finalizing 

§ 441.484 without modification. 

IV. Provisions of the Final Regulation 

Generally, this final regulation 

incorporates the January 18, 2007 

provisions of the proposed rule. The 

provisions of this final regulation that 

differ from the proposed rule are as 

follows: 

(1) We have revised the final 

regulation in relevant places by adding 

‘‘or their representatives, if applicable’’ 

when we refer to individuals or 

participants. The provisions that we 

revised include: § 441.450(b); 

§ 441.450(c) (that is, the definitions of 

‘‘Service budget’’ and ‘‘Service plan’’); 

§ 441.454(a), (c), (d); § 441.464(a)(2)(ii); 

§ 441.464(d)(3)(i) and (ii); 

§ 441.464(d)(4); § 441.468(b)(2); 

§ 441.468(c)(1) and (2); § 441.468(d); 

§ 441.468(e); § 441.470(c); 

§ 441.470(c)(1); § 441.470(e); 

§ 441.470(f); § 441.472(c); § 441.478(a), 

(b) and (c); § 441.482(a); and 

§ 441.484(a). 

(2) We have revised § 441.450(b) by 

adding a new requirement in paragraph 

(4) to include the authority of 

participants to train their workers and to 

access training provided by or through 

the State if additional worker training is 

required or desired by the participant, 

or participant’s representative, if 

applicable. 

(3) We have revised § 441.450(c), the 

definition of individualized backup 

plan, to clarify that the individualized 

backup plan must demonstrate an 

interface with the risk management 

provision at § 441.476. 

(4) We have revised § 441.450(c) to 

add a definition for ‘‘supports broker or 

consultant’’ and to require that a 

supports broker or consultant be 

available to each participant, as part of 

the support system. We have defined 

‘‘supports broker or consultant’’ to mean 

an individual who supports participants 

in directing their PAS and service 

budgets. The supports broker or 

consultant is an agent of the participants 

and takes direction from the 

participants, or their representatives, if 

applicable, about what support is 

needed or desired. The supports broker 

or consultant is primarily responsible 

for facilitating participants’ needs in a 

manner that comports with the 

participants’ preferences. The primary 

functions of the supports broker or 

consultant are to inform, counsel, train, 

and assist the participant, or the 

participant’s representative, if 

applicable, with whatever is needed to 

develop a service budget and effectively 

manage the participant’s self-directed 

PAS and budgets. Supports brokers or 

consultants must be accessible to 

participants, maintain an ongoing 

relationship with participants, monitor 

whether participants’ health status has 

changed, and whether expenditures of 

funds are being made in accordance 

with the service budgets. States must 

develop a monitoring protocol that 

includes regularly scheduled telephone 

and face-to-face contact with 

participants. States must also develop 

the training requirements and 

qualifications for supports brokers or 

consultants that include, at a minimum, 

the following: 

• An understanding of the 

philosophy of self-direction and personcentered and directed planning. 

• The ability to facilitate participants’ 

independence and participants’ 

preferences in managing PAS and 

budgets, including any risks assumed by 

participants; 

• The ability to develop service 

budgets and ensure appropriate 

documentation; 

• Knowledge of the PAS and 

resources available in the participant’s 

community and how to access them. 

The availability of a supports broker or 

consultant to each participant is a 

requirement of the support system. 

(5) We have revised § 441.454(b) to 

add examples of the types of tax-related 

requirements that participants, if they 

have chosen the cash option, or the FMS 

entity, must perform. 

(6) We have revised § 441.456(b) and 

§ 441.458(c) to require that the State 

specify in the section 1915(j) State plan 

amendment the safeguards that are in 

place to ensure continuity of services 

during the transition from self-directed 

PAS. 

(7) We have revised § 441.460(a) to 

insert ‘‘PAS’’ before ‘‘providers.’’ 

(8) We have revised § 441.464(c) to 

require that information on feasible 

alternatives be communicated to the 

individual in a manner and language 

understandable by the individual. 

(9) We have revised § 441.464(d) to 

add a requirement that States may 

arrange for the provision of a support 

system, in addition to providing the 

support system themselves. 

(10) We have revised § 441.464(d)(1) 

to add a requirement that before 

enrollment, the support system 

appropriately counsels an individual 

about disenrollment. 

(11) We have revised § 441.464(d)(2) 

to add a requirement that any 

information provided to the participant 

as a part of the support system must be 

communicated to the participant in a 

manner and language understandable by 

the participant. 

(12) We have revised 

§ 441.464(d)(2)(vii) to insert the term 

‘‘PAS’’ to the requirement that the 

support activities include the ability to 

freely choose PAS providers. 

(13) We have revised § 441.464(d)(2) 

by adding a clause (xv) that the list of 

support activities include information 

about an advocate or advocacy systems 

available in the State and how a 

participant, or a participant’s 

representative, can access the advocate 

or advocacy systems. 

(14) We have revised § 441.468(c)(2) 

by adding the word ‘‘allow’’ at the 

beginning of the paragraph. 

(15) We have revised § 441.468(c) to 

add a new paragraph (8) to include that 

the State ensures that a participant may 

request revisions to a service plan, 

based on a change in needs or health 

status. 

(16) We have revised § 441.470(d) to 

make a technical change to insert the 

phrase, ‘‘to the extent that expenditures 

would otherwise be made for the human 

assistance,’’ into the requirement 

concerning procedures that govern how 

a participant, at the election of a State, 

may reserve funds to purchase items 

that increase independence or substitute 

for human assistance. 

(17) We have revised § 441.470(e) to 

add the phrase, ‘‘or reserved for 

permissible purchases,’’ to the 

requirement concerning procedures that 

govern how a person may use a 

discretionary amount, if applicable. 

(18) We have revised § 441.472 to 

revise subsection (a) to indicate that the 

budget methodology is established by 

the State in such a way as to ensure the 

State’s role in service authorization, and 

to add a new subsection (e) to require 

a State to have a procedure to adjust a 

budget, subject to a State’s medical 

necessity criteria, when a reassessment 

indicates a change in a participant’s 

medical condition, functional status, or 

living situation. 

(19) We have revised § 441.474(b) to 

add a new requirement that quality of 

care measures must be made available to 

CMS upon request and that the QA/QI 

plan must include indicators approved 

or prescribed by the Secretary. 

(20) We have revised § 441.478(b) to 

add a requirement that participants, or 

their representatives, if applicable, also 

have the right to access training 


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provided by or through the State so that 

their PAS providers can meet any 

additional qualifications that 

participants think are needed. 

(21) We have revised § 441.482(b) to 

insert the words, ‘‘or goal,’’ to the 

requirement that the services, supports, 

and items that are purchased with a 

service budget must be linked to an 

assessed participant need or goal 

established in the service plan. 

V. Collection of Information 

Requirements 

We solicited public comment on each 

of the issues for the following sections 

of this document that contain 

information collection requirements 

(ICRs). We received one general 

comment. We also received public 

comments on four specific sections 

contained in the ICRs. The comments 

and our responses follow: 

General 

Comment: Two commenters stated 

that the estimates in the collection of 

information section do not reflect 

differences in State Medicaid systems 

and the populations served and that we 

have severely underestimated the time 

and resources that are necessary to meet 

the requirements. 

Response: Our estimates are based on 

the average time it may take for States 

to fulfill the requirements of this rule 

and reflect the appropriate differences 

in the State Medicaid systems and 

populations. 

Note: The self-directed PAS State plan 

option pre-print is currently approved under 

OMB number 09398–1024. 

Section 441.454—Use of Cash 

Section 441.454(d) requires States to 

make available a financial management 

entity to a participant who has 

demonstrated, after additional 

counseling, information, training, or 

assistance, that the participant cannot 

effectively manage the cash option 

described in paragraph (a) of this 

section. 

The burden associated with this 

requirement is the time and effort put 

forth by the State to counsel and to 

provide information, training, and or 

assistance to participants. We believe 

that it would take a State 1 hour per 

participant to provide this guidance. 

The total annual burden of this 

requirement would vary according to 

the number of participants in each State 

who are self-directing their PAS under 

this State Plan option. We received no 

public comment on this section. 

Therefore, we have not revised the 

collection of information estimate. 

Section 441.456 Voluntary 

Disenrollment 

Section 441.456(b) requires States to 

specify in the State plan the safeguards 

that are in place to ensure continuity of 

services during the transition from selfdirected PAS. 

The burden associated with this 

requirement is the time and effort put 

forth by the State to revise its State plan 

to include the safeguards. While the 

burden associated with this requirement 

is subject to the PRA, the burden 

associated with the State plan 

amendment is currently approved under 

OMB #0938–0933. We received no 

public comment on this section. 

Therefore, we have not revised the 

collection of information estimate. 

Section 441.458 Involuntary 

Disenrollment 

Section 441.458(c) requires States to 

specify in the State plan the safeguards 

that are in place to ensure continuity of 

services during the transition from selfdirected PAS. 

The burden associated with this 

requirement is the time and effort put 

forth by the State to revise its State plan 

to include the safeguards. While the 

burden associated with this requirement 

is subject to the PRA, the burden 

associated with the State plan 

amendment is currently approved under 

OMB #0938–0933. We received no 

public comment on this section. 

Therefore, we have not revised the 

collection of information estimate. 

Section 441.464 State Assurances 

Section 441.464(a) requires States to 

provide an assurance that necessary 

safeguards have been taken to protect 

the health and welfare of individuals 

furnished services under the program 

and to assure the financial 

accountability for funds expended for 

self-directed services. 

The burden associated with this 

requirement is the time and effort it 

would take for each State to meet these 

conditions. To meet the requirements in 

§ 441.464(a), we estimate it would take 

each State 80 hours to develop a system 

of safeguards that protects participants’ 

health and welfare and ensures financial 

accountability for funds expended, and 

no further burden would be associated 

with this requirement. We estimate the 

total maximum one-time burden for this 

requirement to be 4,480 hours. (56 

States × 80 hours = 4,480 hours) 

Comment: One commenter thought 

that the estimate of 80 hours to develop 

a system of safeguards was unreasonable 

given that some States would be 

developing and promulgating state rules 

to implement the new safeguards, in 

addition to having to adjust contracts, 

train staff and providers in new 

procedures and make any needed 

system modifications. 

Response: We do not believe that the 

estimate of 80 hours to develop a system 

of safeguards is unreasonable. All 

Medicaid programs must assure the 

health and welfare of beneficiaries and 

fiscal accountability, so these are not 

new safeguards. Furthermore, we do not 

believe that all States will have to 

develop and promulgate rules. We 

acknowledge that some States may need 

to adjust contracts, train staff and make 

system modifications, but do not 

believe, that making such changes 

would exceed, on average, 80 hours per 

State. Many States already offer the 

opportunity for self-direction in their 

section 1915(c) waiver programs, so it 

would not be overly difficult for these 

States to transition to the opportunity 

for self-direction offered under the selfdirected PAS State plan option. We also 

note that there would be little, if any, 

burden to the States associated with the 

training of PAS providers, as 

participants bear the responsibility for 

training their PAS providers. 

Accordingly, we have not revised the 

collection of information estimate. 

Section 441.464(b) requires States to 

provide an assurance that they will 

perform an evaluation of the need for 

personal care under the State plan or 

personal services under a section 

1915(c) home and community-based 

services waiver program. The burden 

associated with this requirement is the 

time and effort it would take for each 

State to meet this condition. To meet the 

requirement in § 441.464(b), we estimate 

it would take a State 2 hours per 

participant to perform this evaluation of 

need. The total annual burden of this 

requirement would vary according to 

the number of participants in each State 

who are (1) entitled to medical 

assistance for personal care services 

under the State plan, or receive home 

and community-based services under a 

section 1915(c) waiver program; (2) may 

require self-directed PAS; and (3) may 

be eligible for self-directed PAS. We 

received no public comment on this 

section. Therefore, we have not revised 

the collection of information estimate. 

Section 441.464(c) requires States to 

provide an assurance that individuals 

likely to require personal care under the 

State plan, or home and communitybased services under a section 1915(c) 

waiver program, are informed of the 

feasible alternatives, if available, under 

the State’s self-directed PAS State plan 

option, at the choice of these 

individuals, to the provision of personal 


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care services under the State plan or 

PAS under a section 1915(c) home and 

community-based services waiver 

program. The burden associated with 

this requirement is the time and effort 

it would take for each State to meet this 

condition. To meet the requirement in 

§ 441.464(c), we estimate it would take 

a State 15 minutes per participant to 

inform individuals of feasible 

alternatives. The total annual burden of 

this requirement would vary according 

to the number of participants in each 

State who are likely to require personal 

care under the State plan, or home and 

community-based services under a 

section 1915(c) waiver program. 

Comment: Two commenters stated 

that the proposed 15-minute time 

estimate for explaining feasible 

alternatives to individuals was too brief. 

Response: We do not believe that the 

estimate of 15 minutes to inform 

individuals of the feasible alternatives is 

too short. We believe that most States 

will incorporate information about 

feasible alternatives within the context 

of the assessment of the individual’s 

needs, or during some other preenrollment contact with the individual. 

We estimated that the time to advise an 

individual of the feasible alternatives 

would only be a small portion of the 

time spent during the assessment. 

Accordingly, we have not revised the 

collection of information estimate. 

Section 441.464(d) requires States to 

provide a support system that meets the 

following conditions: 

(1) Appropriately assesses and 

counsels an individual before 

enrollment. 

(2) Provides appropriate information, 

counseling, training, and assistance to 

ensure that a participant is able to 

manage the services and budgets. The 

support activities must include at least 

the following: 

(i) Person-centered planning and how 

it is applied. 

(ii) Information about the services 

available for self-direction. 

(iii) Range and scope of individual 

choices and options. 

(iv) Process for changing the service 

plan and service budget. 

(v) Grievance process. 

(vi) Risks and responsibilities of selfdirection. 

(vii) Freedom of choice of providers. 

(viii) Individual rights. 

(ix) Reassessment and review 

schedules. 

(x) Defining goals, needs, and 

preferences. 

(xi) Identifying and accessing 

services, supports, and resources. 

(xii) Development of risk management 

agreements. 

(xiii) Development of an 

individualized backup plan. 

(xiv) Recognizing and reporting 

critical events. 

(3) Offers additional information, 

counseling, training, or assistance, 

including financial management 

services under either of the following 

conditions: 

(i) At the request of the participant for 

any reason. 

(ii) When the State has determined 

the participant is not effectively 

managing the services identified in the 

service plan or budget. 

The burden associated with this 

requirement is the time and effort it 

would take for each State to meet these 

conditions. To meet the requirements in 

§ 441.464(d)(1), we estimate it would 

take each State 2 hours per participant. 

To meet the requirements in 

§ 441.464(d)(2), we estimate it would 

take each State 1 hour per participant. 

To meet the requirements in 

§ 441.464(d)(3), we estimate it would 

take each State 1 hour per participant. 

The total annual burden of these 

requirements would vary according to 

the number of participants in each State 

who are self-directing their PAS under 

this State plan option. We received no 

public comment on this section. 

Therefore, we have not revised the 

collection of information estimate. 

Section 441.464(e) requires the State 

to provide to CMS an annual report on 

the number of individuals served and 

the total expenditures on their behalf in 

the aggregate. 

The annual burden associated with 

this requirement is the time and effort 

it would take for each State to gather the 

necessary data and provide an annual 

report to CMS. We estimate that it 

would take one State no more than 25 

hours to meet this requirement; 

therefore, the total maximum annual 

burden is 1,400 hours. (56 States × 25 

hours = 1,400 hours) We received no 

public comment on this section. 

Therefore, we have not revised the 

collection of information estimate. 

Section 441.464(f) requires the State 

to provide to CMS an evaluation of the 

overall impact on the health and welfare 

of participating individuals compared to 

non-participants every three years, as 

determined by CMS. 

The burden associated with this 

requirement is the time and effort it 

would take for each State to provide 

such an evaluation to CMS. We estimate 

that it would take one State 200 hours 

to prepare and submit the evaluation to 

CMS every 3rd year; therefore, the total 

maximum burden on that 3rd year 

would be 11,200 hours. (56 States × 200 

hours = 11,200) 

Comment: One commenter questioned 

how we arrived at the estimate of 200 

hours to prepare and submit an 

evaluation every three years as we did 

not include the requirements for the 

report. The commenter urged use of 

existing data sources. 

Response: We believe that our 

estimate of the time to prepare and 

submit the three-year evaluation was 

reasonable. Our estimate was based on 

the time we expected it would take a 

State, on average, to determine the 

measures it would use to compare the 

impact of the self-directed PAS State 

plan option on the health and welfare of 

participants and non-participants, 

collect and analyze data, and summarize 

the findings in a report. Many, if not all, 

States collect data on performance and 

outcome measures within the context of 

their quality management systems in 

their current Medicaid programs. We 

believe that it would be appropriate for 

States to use data they have already 

collected to satisfy the requirement for 

the evaluation in § 441.464(f). Therefore, 

we have not revised the collection of 

information estimate. 

Section 441.468 Service Plan Elements 

Section 441.468(b) requires a State to 

develop a service plan for each program 

participant using a person-centered and 

directed planning process to ensure the 

following: 

(1) The identification of each program 

participant’s preferences, choices, and 

abilities, and strategies to address those 

preferences, choices, and abilities. 

(2) The option for the program 

participant to exercise choice and 

control over services and supports 

discussed in the plan. 

(3) Assessment of, and planning for 

avoiding, risks that may pose harm to a 

participant. 

The burden associated with this 

requirement is the time and effort it 

would take for each State to meet these 

conditions. We estimate it would take 

each State 3 hours per participant to 

meet this requirement. The total annual 

burden of this requirement would vary 

according to the number of participants 

in each State who are self-directing their 

PAS under this State plan option. We 

received no public comment on this 

section. Therefore, we have not revised 

the collection of information estimate. 

Section 441.468(d) states that when 

an entity that is permitted to provide 

other State plan services is responsible 

for service plan development, the State 

must describe the safeguards that are in 

place to ensure that the service 

provider’s role in the planning process 

is fully disclosed to the participant and 


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controls are in place to avoid any 

possible conflict of interest. 

The burden associated with this 

requirement is the time and effort it 

would take for the State to fully disclose 

the required information. We estimate 

that it would take one State 15 minutes 

per participant to meet this requirement. 

The total annual burden of this 

requirement would vary according to 

the number of participants in each State 

who are self-directing their PAS under 

this State Plan option. We received no 

public comment on this section. 

Therefore, we have not revised the 

collection of information estimate. 

Section 441.468(e) requires that an 

approved self-directed service plan 

conveys authority to the participant to 

perform, at a minimum, the following 

tasks: recruit and hire workers to 

provide self-directed services, including 

specifying worker qualifications; fire 

workers; supervise workers in the 

provision of self-directed services; 

manage workers in the provision of selfdirected services (determining worker 

duties, scheduling workers, training 

workers in assigned tasks, and 

evaluating workers’ performance); 

determine the amount paid for a service, 

support, or item; and review and 

approve provider invoices. 

While this information collection is 

subject to the PRA, we believe this 

requirement meets the requirements of 5 

CFR 1320.3(b)(2), and as such, the 

burden associated with this requirement 

is exempt from the PRA. We received no 

public comment on this section. 

Therefore, we have not revised the 

collection of information estimate. 

Section 441.470 Service Budget 

Elements 

Section 441.470 states that a service 

budget must be developed and approved 

by the State based on the assessment of 

need and service plan and must include 

the following: 

(a) The specific dollar amount a 

participant may utilize for services and 

supports. 

(b) How the participant is informed of 

the amount of the service budget before 

the service plan is finalized; 

(c) The procedures for how the 

participant may adjust the budget, 

including the following: 

(1) How the participant may freely 

make changes to the budget. 

(2) The circumstances, if any, that 

may require prior approval before a 

budget adjustment is made. 

(3) The circumstances, if any, that 

may require a change in the service 

plan. 

(d) The procedure(s) that governs how 

a person, at the election of the State, 

may reserve funds to purchase items 

that increase independence or substitute 

for human assistance including 

additional goods, supports, services or 

supplies. 

(e) The procedure(s) that governs how 

a person may use a discretionary 

amount, if applicable, to purchase items 

not otherwise delineated in the budget. 

(f) How participants are afforded the 

opportunity to request a fair hearing 

under § 441.300 if a participant’s 

request for a budget adjustment is 

denied or the amount of the budget is 

reduced. 

The burden associated with this 

requirement is the time and effort put 

forth by the State to develop a service 

budget. We estimate it would take a 

State 3 hours per participant to meet 

this requirement. The total annual 

burden of this requirement would vary 

according to the number of participants 

in each State who are self-directing their 

PAS under this State plan option. We 

received no public comment on this 

section. Therefore, we have not revised 

the collection of information estimate. 

Section 441.472 Budget Methodology 

Section 441.472(b) requires a State to 

have procedures in place to safeguard 

participants when the budgeted service 

amount is insufficient to meet a 

participant’s needs. 

The burden associated with this 

requirement is the time and effort it 

would take for a State to develop its 

procedures on how to handle this. We 

estimate that it would take one State 16 

hours to develop these procedures and 

no further burden would be associated 

with this requirement. The one-time 

maximum burden associated with this 

requirement is 896 hours. (56 States × 

16 hours = 896 hours) We received no 

public comment on this section. 

Therefore, we have not revised the 

collection of information estimate. 

Section 441.472(c) requires a State to 

have a method of notifying participants 

of the amount of any limit that applies 

to a participant’s self-directed PAS and 

supports. 

The burden associated with this 

requirement is the time and effort it 

would take for the State to provide this 

notification. We estimate it would take 

one State 15 minutes per participant to 

meet this requirement. The total annual 

burden of this requirement would vary 

according to the number of participants 

in each State who are self-directing their 

PAS under this State plan option. We 

received no public comment on this 

section. Therefore, we have not revised 

the collection of information estimate. 

Section 441.474 Quality Assurance 

and Improvement Plan 

Section 441.474(a) requires States to 

provide a quality assurance and 

improvement plan that describes the 

State’s system of how it would conduct 

activities of discovery, remediation, and 

quality improvement in order to learn of 

critical incidents or events that affect 

participants, correct shortcomings, and 

pursue opportunities for improvement; 

and 

(b) The quality assurance and 

improvement plan shall also describe 

the system performance measures, 

outcome measures, and satisfaction 

measures that the State would use to 

monitor and evaluate the self-directed 

State plan option. 

The burden associated with this 

requirement is the time and effort it 

would take for the State to customize its 

quality assurance and improvement 

plan to the self-directed service delivery 

model. We estimate that it would take 

one State 100 hours to customize its 

quality assurance and improvement 

plan and no further burden would be 

associated with this requirement. The 

one-time maximum burden associated 

with this requirement is 5,600 hours. 

(56 States × 100 hours = 5,600 hours) 

Comment: One commenter urged that 

CMS clarify that there will be ongoing 

burdens associated with quality 

assurance and improvement activities 

and not just the one-time burdens 

indicated in the rule. 

Response: As States always retain the 

ultimate oversight and administrative 

authority for any Medicaid program, we 

think that any ongoing burden is 

subsumed within the State’s normal 

course of doing business. Accordingly, 

we have not revised the collection of 

information estimate to account for an 

ongoing burden as suggested by the 

commenter. 

Section 441.484 Financial 

Management Services 

Section 441.484(a) proposes that 

States may choose to provide financial 

management services to participants 

self-directing PAS, with the exception of 

those participants utilizing the cash 

option who directly perform those 

functions. 

Section 441.484(c) proposes to require 

that the financial management entity 

provide functions including, but not 

limited to, the following: 

(1) Collect and process timesheets of 

the participant’s workers. 

(2) Process payroll, withholding, 

filing and payment of applicable 

Federal, State, and local employmentrelated taxes and insurance. 


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(3) Maintain a separate account for 

each participant’s budget. 

(4) Track and report disbursements 

and balances of participant funds. 

(5) Process and pay invoices for goods 

and services approved in the service 

plan. 

(6) Provide to participants periodic 

reports of expenditures and the status of 

the approved service budget. 

Section 441.484(d) requires States not 

utilizing a financial management entity 

must perform the functions listed in 

paragraph (c) of this section on behalf of 

participants self-directing PAS, with the 

exception of those participants utilizing 

the cash option who directly perform 

those functions. 

The burden associated with this 

requirement is the time and effort it 

would take for the financial 

management entity or State to develop 

and perform the listed functions. We 

estimate it would take a financial 

management entity or the State 320 

hours to develop the financial 

management system. Once the system is 

in place, the annual burden associated 

with these functions would vary 

according to the number of participants 

in each State who are self-directing their 

PAS under this State Plan option. We 

estimate the maximum one-time burden 

on the States to develop the financial 

management system to be 17,920 hours 

during the first year. (56 States × 320 

hours = 17,920) 

Note: Annual burden in the following years 

will vary. We have no data on how many 

financial management entities would be 

affected by this requirement; therefore, we 

are unable to provide total annual burden 

associated with financial management 

entities. We received no public comment on 

this section. Therefore, we have not revised 

the collection of information estimate. 

The total aggregate burden for the 

requirements in this final regulation that 

affect States annually is estimated to be 

1,400 hours. The total aggregate burden 

associated with one-time requirements 

on States is estimated to be 28,896. The 

total aggregate burden associated with 

the burden placed on States every 3rd 

year is estimated to be 11,200 hours. 

Note: We are unable to provide aggregate 

burden totals for those requirements affecting 

participants because burden will vary 

according to the number of participants in 

each State who are self-directing their PAS 

under this State Plan option. We are also 

unable to provide aggregate burden for 

financial management entities affected by 

§ 441.484(a). 

This document imposed information 

collection and recordkeeping 

requirements. Consequently, it was 

reviewed by the Office of Management 

and Budget under the authority of the 

Paperwork Reduction Act of 1995 (44 

U.S.C. 35). 

VI. Regulatory Impact Statement 

A. Overall Impact 

We have examined the impact of this 

rule as required by Executive Order 

12866 (September 1993, Regulatory 

Planning and Review), the Regulatory 

Flexibility Act (RFA) (September 19, 

1980, Pub. L. 96–354), section 1102(b) of 

the Social Security Act, the Unfunded 

Mandates Reform Act of 1995 (Pub. L. 

104–4), and Executive Order 13132 on 

Federalism, and the Congressional 

Review Act (5 U.S.C. 804(2)). 

Executive Order 12866, as amended, 

directs agencies to assess all costs and 

benefits of available regulatory 

alternatives and, if regulation is 

necessary, to select regulatory 

approaches that maximize net benefits 

(including potential economic, 

environmental, public health and safety 

effects, distributive impacts, and 

equity). A regulatory impact analysis 

(RIA) must be prepared for major rules 

with economically significant effects 

($100 million or more in any 1 year). 

This final regulation does not reach the 

economic threshold and thus is not 

considered a major rule. 

The RFA requires agencies to analyze 

options for regulatory relief of small 

businesses. 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 $6.5 million to $31.5 million in any 

1 year. Individuals and States are not 

included in the definition of a small 

entity. An RFA was not prepared 

because the Secretary has determined 

that this final regulation would 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. Analysis for 

section 1102(b) of the Act was not 

prepared because the Secretary has 

determined that this final regulation 

would not have a significant impact on 

the operations of a substantial number 

of small rural hospitals. 

Section 202 of the Unfunded 

Mandates Reform Act of 1995 also 

requires that agencies assess anticipated 

costs and benefits before issuing any 

rule whose mandates require spending 

in any 1 year of $100 million in 1995 

dollars, updated annually for inflation. 

That threshold level is currently 

approximately $130 million. This final 

regulation would have no consequential 

effect on State, local, or tribal 

governments in the aggregate, or on the 

private sector near the threshold amount 

of $130 million. 

Executive Order 13132 establishes 

certain requirements that an agency 

must meet when it promulgates a 

proposed rule (and subsequent final 

regulation) that imposes substantial 

direct requirement costs on State and 

local governments, preempts State law, 

or otherwise has Federalism 

implications. As this final regulation 

would not impose any costs on State or 

local governments, the requirements of 

E.O. 13132 are not applicable. 

B. Anticipated Effects 

FFP will be available for self-directed 

PAS if the State elects to offer this 

opportunity through the approved State 

plan. As self-direction is an alternative 

service delivery model, it is expected 

that the impact on Medicaid spending 

would not be very large. The use of selfdirected PAS is estimated to cost a total 

of $225 million in FY 2008 to FY 2012, 

of which, $127 million is Federal share. 

In making this estimate, we 

considered that costs might increase due 

to new covered expenses (such as 

microwave ovens or accessibility ramps) 

as well as new applicants being 

attracted to the Medicaid program, 

because of the permissibility of 

payments to relatives. Costs could 

decrease because beneficiaries might 

require less help and less expensive 

help. We also noted that some States 

have already implemented self-directed 

programs under other Medicaid 

authorities and thus, in those States, 

there would be little cost effect to the 

statute or this new regulation. We first 

estimated that the projected impact of 

all our proposals would amount to an 

overall 0.5 percent increase in personal 

care service expenditures, if all States 

and Territories implemented this selfdirection PAS State plan option. We 

then accounted for a partial starting 

year, a phase-in period and the fact that 

this is a State plan option. Our final 

estimate is as noted in the table below. 


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SECTION 1915(J) SELF-DIRECTED PERSONAL ASSISTANCE SERVICES PROGRAM (CASH & COUNSELING) 

[Dollars in Millions] 

FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 Total FY 

2008–2012 

Federal Cost ................................................................ 12 20 29 32 34 127 

State Cost .................................................................... 9 15 22 24 26 96 

Total * ........................................................................... 22 35 51 56 61 225 

* Amounts may not equal total due to rounding. 

C. Alternatives Considered 

In considering alternatives to the 

proposals presented in this proposed 

rule, we considered the current 

practices under section 1115 

demonstrations and section 1915(c) 

waiver programs that implemented selfdirection. In particular, we considered 

whether to allow States the flexibility to 

offer the option of disbursing cash 

prospectively to participants. We 

learned from the experience of the 

section 1115 demonstrations that 

participants were able to successfully 

manage the funds in their budget and 

maintain financial accountability, with 

some general guidance and oversight. In 

light of our desire to provide flexibility 

to the beneficiaries and to better reflect 

the intent of the PAS State plan option, 

we proposed this option. 

We also considered the extent to 

which to include prescriptive support 

activities that States must include in 

their support system. We proposed a 

minimum list of support activities to 

ensure that participants have the 

necessary tools to successfully manage 

their services and budgets. We were 

concerned that if States were not 

required to include such activities as 

part of the support system within the 

PAS State plan option, the likelihood of 

successfully self-directing PAS would 

diminish. As we learned from our 

experience with the section 1115 

demonstrations and section 1915(c) 

waiver programs, support activities have 

a crucial role in leading to the success 

of any self-directed PAS program. 

D. Conclusion 

As indicated in the estimated 

expenditures table above, we project the 

Federal Medicaid program cost of this 

final rule to be $127 million over the 

period from FY 2008 to FY 2012. In 

addition, we project the total State cost 

of this final rule to be $96 million over 

the period from FY 2008 to FY 2012. 

In accordance with the provisions of 

Executive Order 12866, this regulation 

was reviewed by the Office of 

Management and Budget. 

List of Subjects in 42 CFR Part 441 

Aged, Family planning, Grant 

programs-health, Infants and children, 

Medicaid, Penalties, and Reporting and 

recordkeeping requirements. 

■ The Centers for Medicare & Medicaid 

Services amends 42 CFR chapter IV as 

set forth below: 

PART 441—SERVICES: 

REQUIREMENTS AND LIMITS 

APPLICABLE TO SPECIFIC SERVICES 

■ 1. The authority citation for part 441 

continues to read as follows: 

Authority: Sec 1102 of the Social Security 

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

■ 2. Amend part 441 by adding new 

subpart J to read as follows: 

Subpart J—Optional Self-Directed Personal 

Assistance Services Program 

Sec. 

441.450 Basis, scope, and definitions. 

441.452 Self-direction: General. 

441.454 Use of cash. 

441.456 Voluntary disenrollment. 

441.458 Involuntary disenrollment. 

441.460 Participant living arrangements. 

441.462 Statewideness, comparability, and 

limitations on number served. 

441.464 State assurances. 

441.466 Assessment of need. 

441.468 Service plan elements. 

441.470 Service budget elements. 

441.472 Budget methodology. 

441.474 Quality assurance and 

improvement plan. 

441.476 Risk management. 

441.478 Qualifications of providers of 

personal assistance. 

441.480 Use of a representative. 

441.482 Permissible purchases. 

441.484 Financial management services. 

Subpart J—Optional Self-Directed 

Personal Assistance Services Program 

§ 441.450 Basis, scope, and definitions. 

(a) Basis. This subpart implements 

section 1915(j) of the Act concerning the 

self-directed personal assistance 

services (PAS) option through a State 

Plan. 

(b) Scope. A self-directed PAS option 

is designed to allow individuals, or their 

representatives, if applicable, to exercise 

decision-making authority in 

identifying, accessing, managing and 

purchasing their PAS. This authority 

includes, at a minimum, all of the 

following: 

(1) The purchase of PAS and supports 

for PAS. 

(2) Recruiting workers. 

(3) Hiring and discharging workers. 

(4) Training workers and accessing 

training provided by or through the 

State if additional worker training is 

required or desired by the participant, 

or participant’s representative, if 

applicable. 

(5) Specifying worker qualifications. 

(6) Determining worker duties. 

(7) Scheduling workers. 

(8) Supervising workers. 

(9) Evaluating worker performance. 

(10) Determining the amount paid for 

a service, support or item. 

(11) Scheduling when services are 

provided. 

(12) Identifying service workers. 

(13) Reviewing and approving 

invoices. 

(c) Definitions. As used in this part— 

Assessment of need means an 

evaluation of the needs, strengths, and 

preferences of participants for services. 

This includes one or more processes to 

obtain information about an individual, 

including health condition, personal 

goals and preferences, functional 

limitation, age, school, employment, 

household, and other factors that are 

relevant to the authorization and 

provision of services. Assessment 

information supports the development 

of the service plan and the subsequent 

service budget. 

Individualized backup plan means a 

written plan that meets all of the 

following: 

(1) Is sufficiently individualized to 

address each participant’s critical 

contingencies or incidents that would 

pose a risk of harm to the participant’s 

health or welfare; 

(2) Must demonstrate an interface 

with the risk management provision at 

§ 441.476 which requires States to 

assess and identify the potential risks to 

the participant (such as any critical 

health needs), and ensure that the risks 

and how they will be managed are the 

result of discussion and negotiation 

among the persons involved in the 

service plan development; 


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(3) Must not include the 911 

emergency system or other emergency 

system as the sole backup feature of the 

plan; and 

(4) Must be incorporated into the 

participant’s service plan. 

Legally liable relatives means persons 

who have a duty under the provisions 

of State law to care for another person. 

Legally liable relatives may include any 

of the following: 

(1) The parent (biological or adoptive) 

of a minor child or the guardian of a 

minor child who must provide care to 

the child. 

(2) Legally-assigned caretaker 

relatives. 

(3) A spouse. 

Self-directed personal assistance 

services (PAS) means personal care and 

related services, or home and 

community-based services otherwise 

available under the State plan or a 

1915(c) waiver program that are 

provided to an individual who has been 

determined eligible for the PAS option. 

Self-directed PAS also includes, at the 

State’s option, items that increase the 

individual’s independence or 

substitutes (such as a microwave oven 

or an accessibility ramp) for human 

assistance, to the extent the 

expenditures would otherwise be made 

for the human assistance. 

Self-direction means the opportunity 

for participants or their representatives 

to exercise choice and control over the 

budget, planning, and purchase of selfdirected PAS, including the amount, 

duration, scope, provider, and location 

of service provision. 

Service budget means an amount of 

funds that is under the control and 

direction of a participant, or the 

participant’s representative, if any, 

when the State has selected the State 

plan option for provision of selfdirected PAS. It is developed using a 

person-centered and directed process 

and is individually tailored in 

accordance with the participant’s needs 

and personal preferences as established 

in the service plan. 

Service plan means the written 

document that specifies the services and 

supports (regardless of funding source) 

that are to be furnished to meet the 

needs of a participant in the selfdirected PAS option and to assist the 

participant to direct the PAS and to 

remain in the community. The service 

plan is developed based on the 

assessment of need using a personcentered and directed process. The 

service plan builds upon the 

participant’s capacity to engage in 

activities that promote community life 

and respects the participant’s 

preferences, choices, and abilities. The 

participant’s representative, if any, 

families, friends and professionals, as 

desired or required by the participant, 

will be involved in the service-planning 

process. 

Support system means information, 

counseling, training, and assistance that 

support the participant (or the 

participant’s family or representative, as 

appropriate) in identifying, accessing, 

managing, and directing their PAS and 

supports and in purchasing their PAS 

identified in the service plan and 

budget. 

Supports broker or consultant means 

an individual who supports participants 

in directing their PAS and service 

budgets. The supports broker or 

consultant is an agent of the participants 

and takes direction from the 

participants, or their representatives, if 

applicable, about what information, 

counseling, training or assistance is 

needed or desired. The supports broker 

or consultant is primarily responsible 

for facilitating participants’ 

development of a service budget and 

effective management of the 

participants’ PAS and budgets in a 

manner that comports with the 

participants’ preferences. States must 

develop a protocol to ensure that 

supports brokers or consultants: are 

accessible to participants; have regularly 

scheduled phone and in-person contacts 

with participants; monitor whether 

participants’ health status has changed 

and whether expenditure of funds are 

being made in accordance with service 

budgets. States must also develop the 

training requirements and qualifications 

for supports brokers or consultants that 

include, at a minimum, the following: 

(1) An understanding of the 

philosophy of self-direction and personcentered and directed planning; 

(2) The ability to facilitate 

participants’ independence and 

participants’ preferences in managing 

PAS and budgets, including any risks 

assumed by participants; 

(3) The ability to develop service 

budgets and ensure appropriate 

documentation; and 

(4) Knowledge of the PAS and 

resources available in the participant’s 

community and how to access them. 

The availability of a supports broker 

or consultant to each participant is a 

requirement of the support system. 

§ 441.452 Self-direction: General. 

(a) States must have in place, before 

electing the self-directed PAS option, 

personal care services through the State 

plan, or home and community-based 

services under a section 1915(c) waiver. 

(b) The State must have both 

traditional service delivery and the selfdirected PAS service delivery option 

available in the event that an individual 

voluntarily disenrolls or is involuntarily 

disenrolled, from the self-directed PAS 

service delivery option. 

(c) The State’s assessment of an 

individual’s needs must form the basis 

of the level of services for which the 

individual is eligible. 

(d) Nothing in this subpart will be 

construed as affecting an individual’s 

Medicaid eligibility, including that of an 

individual whose Medicaid eligibility is 

attained through receipt of section 

1915(c) waiver services. 

§ 441.454 Use of cash. 

(a) States have the option of 

disbursing cash prospectively to 

participants, or their representatives, as 

applicable, self-directing their PAS. 

(b) States that choose to offer the cash 

option must ensure compliance with all 

applicable requirements of the Internal 

Revenue Service, including, but not 

limited to, retaining required forms and 

payment of FICA, FUTA and State 

unemployment taxes. 

(c) States must permit participants, or 

their representatives, as applicable, 

using the cash option to choose to use 

the financial management entity for 

some or all of the functions described in 

§ 441.484(c). 

(d) States must make available a 

financial management entity to a 

participant, or the participant’s 

representative, if applicable, who has 

demonstrated, after additional 

counseling, information, training, or 

assistance, that the participant cannot 

effectively manage the cash option 

described in paragraph (a) of this 

section. 

§ 441.456 Voluntary disenrollment. 

(a) States must permit a participant to 

voluntarily disenroll from the selfdirected PAS option at any time and 

return to a traditional service delivery 

system. 

(b) The State must specify in a section 

1915(j) State plan amendment the 

safeguards that are in place to ensure 

continuity of services during the 

transition from self-directed PAS. 

§ 441.458 Involuntary disenrollment. 

(a) States must specify the conditions 

under which a participant may be 

involuntarily disenrolled from the selfdirected PAS option. 

(b) CMS must approve the State’s 

conditions under which a participant 

may be involuntarily disenrolled. 

(c) The State must specify in the 

section 1915(j) State plan amendment 

the safeguards that are in place to 

ensure continuity of services during the 

transition from self-directed PAS. 


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§ 441.460 Participant living arrangements. 

(a) Self-directed PAS are not available 

to an individual who resides in a home 

or property that is owned, operated, or 

controlled by a PAS provider who is not 

related to the individual by blood or 

marriage. 

(b) States may specify additional 

restrictions on a participant’s living 

arrangements if they have been 

approved by CMS. 

§ 441.462 Statewideness, comparability 

and limitations on number served. 

A State may do the following: 

(a) Provide self-directed PAS without 

regard to the requirements of 

statewideness. 

(b) Limit the population eligible to 

receive these services without regard to 

comparability of amount, duration, and 

scope of services. 

(c) Limit the number of persons 

served without regard to comparability 

of amount, duration, and scope of 

services. 

§ 441.464 State assurances. 

A State must assure that the following 

requirements are met: 

(a) Necessary safeguards. Necessary 

safeguards have been taken to protect 

the health and welfare of individuals 

furnished services under the program 

and to assure the financial 

accountability for funds expended for 

self-directed services. 

(1) Safeguards must prevent the 

premature depletion of the participant 

directed budget as well as identify 

potential service delivery problems that 

might be associated with budget 

underutilization. 

(2) These safeguards may include the 

following: 

(i) Requiring a case manager, support 

broker or other person to monitor the 

participant’s expenditures. 

(ii) Requiring the financial 

management entity to flag significant 

budget variances (over and under 

expenditures) and bring them to the 

attention of the participant, the 

participant’s representative, if 

applicable, case manager, or support 

broker. 

(iii) Allocating the budget on a 

monthly or quarterly basis. 

(iv) Other appropriate safeguards as 

determined by the State. 

(3) Safeguards must be designed so 

that budget problems are identified on 

a timely basis so that corrective action 

may be taken, if necessary. 

(b) Evaluation of need. The State must 

perform an evaluation of the need for 

personal care under the State Plan or 

services under a section 1915(c) waiver 

program for individuals who meet the 

following requirements: 

(1) Are entitled to medical assistance 

for personal care services under the 

State plan or receiving home and 

community based services under a 

section 1915(c) waiver program. 

(2) May require self-directed PAS. 

(3) May be eligible for self-directed 

PAS. 

(c) Notification of feasible 

alternatives. Individuals who are likely 

to require personal care under the State 

plan, or home and community-based 

services under a section 1915(c) waiver 

program are informed of the feasible 

alternatives, if available, under the 

State’s self-directed PAS State plan 

option, at the choice of these 

individuals, to the provision of personal 

care services under the State plan, or 

PAS under a section 1915(c) home and 

community-based services waiver 

program. Information on feasible 

alternatives must be communicated to 

the individual in a manner and language 

understandable by the individual. Such 

information includes, but is not limited 

to, the following: 

(1) Information about self-direction 

opportunities that is sufficient to inform 

decision-making about the election of 

self-direction and provided on a timely 

basis to an individual or the 

representative which minimally 

includes the following: 

(i) Elements of self-direction 

compared to non-self-directed PAS. 

(ii) Individual responsibilities and 

potential liabilities under the selfdirection service delivery model. 

(iii) The choice to receive PAS 

through a waiver program administered 

under section 1915(c) of the Act, 

regardless of delivery system, if 

applicable. 

(iv) The option, if available, to receive 

and manage the cash amount of their 

individual budget allocation. 

(2) When and how this information is 

provided. 

(d) Support system. States must 

provide, or arrange for the provision of, 

a support system that meets the 

following conditions: 

(1) Appropriately assesses and 

counsels an individual, or the 

individual’s representative, if 

applicable, before enrollment, including 

information about disenrollment. 

(2) Provides appropriate information, 

counseling, training, and assistance to 

ensure that a participant is able to 

manage the services and budgets. Such 

information must be communicated to 

the participant in a manner and 

language understandable by the 

participant. The support activities must 

include at least the following: 

(i) Person-centered planning and how 

it is applied. 

(ii) Information about the services 

available for self-direction. 

(iii) Range and scope of individual 

choices and options. 

(iv) Process for changing the service 

plan and service budget. 

(v) Grievance process. 

(vi) Risks and responsibilities of selfdirection. 

(vii) The ability to freely choose from 

available PAS providers. 

(viii) Individual rights. 

(ix) Reassessment and review 

schedules. 

(x) Defining goals, needs, and 

preferences. 

(xi) Identifying and accessing 

services, supports, and resources. 

(xii) Development of risk management 

agreements. 

(xiii) Development of an 

individualized backup plan. 

(xiv) Recognizing and reporting 

critical events. 

(xv) Information about an advocate or 

advocacy systems available in the State 

and how a participant, or a participant’s 

representative, if applicable, can access 

the advocate or advocacy systems. 

(3) Offers additional information, 

counseling, training, or assistance, 

including financial management 

services under either of the following 

conditions: 

(i) At the request of the participant, or 

participant’s representative, if 

applicable, for any reason. 

(ii) When the State has determined 

the participant, or participant’s 

representative, if applicable, is not 

effectively managing the services 

identified in the service plan or budget. 

(4) The State may mandate the use of 

additional assistance, including the use 

of a financial management entity, or 

may initiate an involuntary 

disenrollment in accordance with 

§ 441.458, if, after additional 

information, counseling, training or 

assistance is provided to a participant 

(or participant’s representative, if 

applicable), the participant (or 

participant’s representative, if 

applicable) has continued to 

demonstrate an inability to effectively 

manage the services and budget. 

(e) Annual report. The State must 

provide to CMS an annual report on the 

number of individuals served and the 

total expenditures on their behalf in the 

aggregate. 

(f) Three-year evaluation. The State 

must provide to CMS an evaluation of 

the overall impact of the self-directed 

PAS option on the health and welfare of 

participating individuals compared to 

non-participants every 3 years. 


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§ 441.466 Assessment of need. 

States must conduct an assessment of 

the participant’s needs, strengths, and 

preferences in accordance with the 

following: 

(a) States may use one or more 

processes and techniques to obtain 

information about an individual, 

including health condition, personal 

goals and preferences for the provision 

of services, functional limitations, age, 

school, employment, household, and 

other factors that are relevant to the 

need for and authorization and 

provision of services. 

(b) Assessment information supports 

the determination that an individual 

requires PAS and also supports the 

development of the service plan and 

budget. 

§ 441.468 Service plan elements. 

(a) The service plan must include at 

least the following: 

(1) The scope, amount, frequency, and 

duration of each service. 

(2) The type of provider to furnish 

each service. 

(3) Location of the service provision. 

(4) The identification of risks that may 

pose harm to the participant along with 

a written individualized backup plan for 

mitigating those risks. 

(b) A State must develop a service 

plan for each program participant using 

a person-centered and directed planning 

process to ensure the following: 

(1) The identification of each program 

participant’s preferences, choices, and 

abilities, and strategies to address those 

preferences, choices, and abilities. 

(2) The option for the program 

participant, or participant’s 

representative, if applicable, to exercise 

choice and control over services and 

supports discussed in the plan. 

(3) Assessment of, and planning for 

avoiding, risks that may pose harm to a 

participant. 

(c) All of the State’s applicable 

policies and procedures associated with 

service plan development must be 

carried out and include, but are not 

limited to, the following: 

(1) Allow the participant, or 

participant’s representative, if 

applicable, the opportunity to engage in, 

and direct, the process to the extent 

desired. 

(2) Allow the participant, or 

participant’s representative, if 

applicable, the opportunity to involve 

family, friends, and professionals (as 

desired or required) in the development 

and implementation of the service plan. 

(3) Ensure the planning process is 

timely. 

(4) Ensure the participant’s needs are 

assessed and that the services meet the 

participant’s needs. 

(5) Ensure the responsibilities for 

service plan development are identified. 

(6) Ensure the qualifications of the 

individuals who are responsible for 

service plan development reflect the 

nature of the program’s target 

population(s). 

(7) Ensure the State reviews the 

service plan annually, or whenever 

necessary due to a change in the 

participant’s needs or health status. 

(8) Ensure that a participant may 

request revisions to a service plan, 

based on a change in needs or health 

status. 

(d) When an entity that is permitted 

to provide other State plan services is 

responsible for service plan 

development, the State must describe 

the safeguards that are in place to 

ensure that the service provider’s role in 

the planning process is fully disclosed 

to the participant, or participant’s 

representative, if applicable, and 

controls are in place to avoid any 

possible conflict of interest. 

(e) An approved self-directed service 

plan conveys authority to the 

participant, or participant’s 

representative, if applicable, to perform, 

at a minimum, the following tasks: 

(1) Recruit and hire workers to 

provide self-directed services, including 

specifying worker qualifications. 

(2) Fire workers. 

(3) Supervise workers in the provision 

of self-directed services. 

(4) Manage workers in the provision 

of self-directed services, which includes 

the following functions: 

(i) Determining worker duties. 

(ii) Scheduling workers. 

(iii) Training workers in assigned 

tasks. 

(iv) Evaluating workers performance. 

(5) Determine the amount paid for a 

service, support, or item. 

(6) Review and approve provider 

invoices. 

§ 441.470 Service budget elements. 

A service budget must be developed 

and approved by the State based on the 

assessment of need and service plan and 

must include the following: 

(a) The specific dollar amount a 

participant may utilize for services and 

supports. 

(b) How the participant is informed of 

the amount of the service budget before 

the service plan is finalized. 

(c) The procedures for how the 

participant, or participant’s 

representative, if applicable, may adjust 

the budget, including the following: 

(1) How the participant, or 

participant’s representative, if 

applicable, may freely make changes to 

the budget. 

(2) The circumstances, if any, that 

may require prior approval before a 

budget adjustment is made. 

(3) The circumstances, if any, that 

may require a change in the service 

plan. 

(d) The procedure(s) that governs how 

a person, at the election of the State, 

may reserve funds to purchase items 

that increase independence or substitute 

for human assistance, to the extent that 

expenditures would otherwise be made 

for the human assistance, including 

additional goods, supports, services or 

supplies. 

(e) The procedure(s) that governs how 

a person may use a discretionary 

amount, if applicable, to purchase items 

not otherwise delineated in the budget 

or reserved for permissible purchases. 

(f) How participants, or their 

representative, if applicable, are 

afforded the opportunity to request a 

fair hearing under § 441.300 if a 

participant’s, or participant’s 

representative, if applicable, request for 

a budget adjustment is denied or the 

amount of the budget is reduced. 

§ 441.472 Budget methodology. 

(a) The State shall set forth a budget 

methodology that ensures service 

authorization resides with the State and 

meets the following criteria: 

(1) The State’s method of determining 

the budget allocation is objective and 

evidence based utilizing valid, reliable 

cost data. 

(2) The State’s method is applied 

consistently to participants. 

(3) The State’s method is open for 

public inspection. 

(4) The State’s method includes a 

calculation of the expected cost of the 

self-directed PAS and supports, if those 

services and supports were not selfdirected. 

(5) The State has a process in place 

that describes the following: 

(i) Any limits it places on selfdirected services and supports, and the 

basis for the limits. 

(ii) Any adjustments that will be 

allowed and the basis for the 

adjustments. 

(b) The State must have procedures to 

safeguard participants when the 

budgeted service amount is insufficient 

to meet a participant’s needs. 

(c) The State must have a method of 

notifying participants, or their 

representative, if applicable, of the 

amount of any limit that applies to a 

participant’s self-directed PAS and 

supports. 

(d) The budget may not restrict access 

to other medically necessary care and 

services furnished under the plan and 

approved by the State but not included 

in the budget. 


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Federal Register / Vol. 73, No. 193 / Friday, October 3, 2008 / Rules and Regulations 57885 

(e) The State must have a procedure 

to adjust a budget when a reassessment 

indicates a change in a participant’s 

medical condition, functional status or 

living situation. 

§ 441.474 Quality assurance and 

improvement plan. 

(a) The State must provide a quality 

assurance and improvement plan that 

describes the State’s system of how it 

will perform activities of discovery, 

remediation and quality improvement 

in order to learn of critical incidents or 

events that affect participants, correct 

shortcomings, and pursue opportunities 

for system improvement. 

(b) The quality assurance and 

improvement plan shall also describe 

the system performance measures, 

outcome measures, and satisfaction 

measures that the State must use to 

monitor and evaluate the self-directed 

State plan option. Quality of care 

measures must be made available to 

CMS upon request and include 

indicators approved or prescribed by the 

Secretary. 

§ 441.476 Risk management. 

(a) The State must specify the risk 

assessment methods it uses to identify 

potential risks to the participant. 

(b) The State must specify any tools 

or instruments it uses to mitigate 

identified risks. 

(c) The State must ensure that each 

service plan includes the risks that an 

individual is willing and able to 

assume, and the plan for how identified 

risks will be mitigated. 

(d) The State must ensure that the risk 

management plan is the result of 

discussion and negotiation among the 

persons designated by the State to 

develop the service plan, the 

participant, the participant’s 

representative, if any, and others from 

whom the participant may seek 

guidance. 

§ 441.478 Qualifications of providers of 

personal assistance. 

(a) States have the option to permit 

participants, or their representatives, if 

applicable, to hire any individual 

capable of providing the assigned tasks, 

including legally liable relatives, as paid 

providers of the PAS identified in the 

service plan and budget. 

(b) Participants, or their 

representatives, if applicable, retain the 

right to train their workers in the 

specific areas of personal assistance 

needed by the participant and to 

perform the needed assistance in a 

manner that comports with the 

participant’s personal, cultural, and/or 

religious preferences. Participants, or 

their representatives, if applicable, also 

have the right to access other training 

provided by or through the State so that 

their PAS providers can meet any 

additional qualifications required or 

desired by participants, or participants’ 

representatives, if applicable. 

(c) Participants, or their 

representatives, if applicable, retain the 

right to establish additional staff 

qualifications based on participants’ 

needs and preferences. 

§ 441.480 Use of a representative. 

(a) States may permit participants to 

appoint a representative to direct the 

provision of self-directed PAS on their 

behalf. The following types of 

representatives are permissible: 

(1) A minor child’s parent or 

guardian. 

(2) An individual recognized under 

State law to act on behalf of an 

incapacitated adult. 

(3) A State-mandated representative, 

after approval by CMS of the State 

criteria, if the participant has 

demonstrated, after additional 

counseling, information, training or 

assistance, the inability to self-direct 

PAS. 

(b) A person acting as a representative 

for a participant receiving self-directed 

PAS is prohibited from acting as a 

provider of self-directed PAS to the 

participant. 

§ 441.482 Permissible purchases. 

(a) Participants, or their 

representatives, if applicable, may, at 

the State’s option, use their service 

budgets to pay for items that increase a 

participant’s independence or substitute 

(such as a microwave oven or an 

accessibility ramp) for human 

assistance, to the extent that 

expenditures would otherwise be made 

for the human assistance. 

(b) The services, supports and items 

that are purchased with a service budget 

must be linked to an assessed 

participant need or goal established in 

the service plan. 

§ 441.484 Financial management services. 

(a) States may choose to provide 

financial management services to 

participants, or their representatives, as 

applicable, self-directing PAS, with the 

exception of those participants utilizing 

the cash option who directly perform 

those functions, utilizing a financial 

management entity, through the 

following arrangements: 

(1) States may use a reporting or 

subagent through its fiscal intermediary 

in accordance with section 3504 of the 

IRS Code and Revenue Procedure 80–4 

and Notice 2003–70; or 

(2) States may use a vendor 

organization that has the capabilities to 

perform the required tasks in 

accordance with Section 3504 of the IRS 

Code and Revenue Procedure 70–6. 

When private entities furnish financial 

management services, the procurement 

method must meet the requirements set 

forth in 45 CFR 74.40 through 74.48. 

(b) States must provide oversight of 

financial management services by 

performing the following functions: 

(1) Monitoring and assessing the 

performance of financial management 

entity, including assuring the integrity 

of financial transactions they perform. 

(2) Designating a State entity or 

entities responsible for this monitoring. 

(3) Determining how frequently 

financial management entity 

performance will be assessed. 

(c) A financial management entity 

must provide functions including, but 

not limited to, the following: 

(1) Collect and process timesheets of 

the participant’s workers. 

(2) Process payroll, withholding, 

filing and payment of applicable 

Federal, State and local employmentrelated taxes and insurance. 

(3) Maintain a separate account for 

each participant’s budget. 

(4) Track and report disbursements 

and balances of participant funds. 

(5) Process and pay invoices for goods 

and services approved in the service 

plan. 

(6) Provide to participants periodic 

reports of expenditures and the status of 

the approved service budget. 

(d) States not utilizing a financial 

management entity must perform the 

functions listed in paragraph (c) of this 

section on behalf of participants selfdirecting PAS, with the exception of 

those participants utilizing the cash 

option who directly perform those 

functions. 

(e) States will be reimbursed for the 

cost of financial management services, 

either provided directly or through a 

financial management entity, at the 

administrative rate of 50 percent. 

(Catalog of Federal Domestic Assistance 

Program No. 93.778, Medical Assistance 

Program) 

(Catalog of Federal Domestic Assistance 

Program No. 93.773, Medicare—Hospital 

Insurance; and Program No. 93.774, 

Medicare—Supplementary Medical 

Insurance Program) 


jlentini on PROD1PC65 with RULES2
57886 Federal Register / Vol. 73, No. 193 / Friday, October 3, 2008 / Rules and Regulations 

Dated: June 18, 2008.s 

Kerry Weems, 

Acting Administrator, Centers for Medicare 

& Medicaid Services. 

Approved: August 6, 2008. 

Michael O. Leavitt, 

Secretary. 

[FR Doc. E8–23102 Filed 9–29–08; 11:15 am] 

BILLING CODE 4120–01–P 


jlentini on PROD1PC65 with RULES2