[Federal Register Volume 74, Number 118 (Monday, June 22, 2009)]
[Proposed Rules]
[Pages 29453-29456]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-14559]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Part 441

[CMS-2296-ANPRM]
RIN 0938-AP61


Medicaid Program; Home and Community-Based Services (HCBS) 
Waivers

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

ACTION: Advance notice of proposed rulemaking.

-----------------------------------------------------------------------

SUMMARY: This advance notice of proposed rulemaking announces the 
intention of CMS to publish proposed amendments to the regulations 
implementing Medicaid home and community-based services waivers under 
section 1915(c) of the Social Security Act and solicits advance public 
comments on the merits of providing States the option to combine or 
eliminate the existing three permitted waiver targeting groups, and on 
the most effective means to define home and community.

DATES: To be assured consideration, comments must be received at one of 
the addresses provided below, no later than 5 p.m. on August 21, 2009.

ADDRESSES: In commenting, please refer to file code CMS-2296-ANPRM. 
Because of staff and resource limitations, we cannot accept comments by 
facsimile (FAX) transmission.
    You may submit comments in one of four ways (please choose only one 
of the ways listed):
    1. Electronically. You may submit electronic comments on this 
regulation to http://www.regulations.gov. Follow the instructions under 
the ``More Search Options'' tab.
    2. By regular mail. You may mail written comments to the following 
address only: Centers for Medicare & Medicaid Services, Department of 
Health and Human Services, Attention: CMS-2296-ANPRM, P.O. Box 8016, 
Baltimore, MD 21244-1850.
    Please allow sufficient time for mailed comments to be received 
before the close of the comment period.
    3. By express or overnight mail. You may send written comments to 
the following address only: Centers for Medicare & Medicaid Services, 
Department of Health and Human Services, Attention: CMS-2296-ANPRM, 
Mail Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
    4. By hand or courier. If you prefer, you may deliver (by hand or 
courier) your written comments before the close of the comment period 
to either of the following addresses:
    a. For delivery in Washington, DC--Centers for Medicare & Medicaid 
Services, Department of Health and Human Services, Room 445-G, Hubert 
H. Humphrey Building, 200 Independence Avenue, SW., Washington, DC 
20201
    (Because access to the interior of the Hubert H. Humphrey Building 
is not readily available to persons without Federal government 
identification, commenters are encouraged to leave their comments in 
the CMS drop slots located in the main lobby of the building. A stamp-
in clock is available for persons wishing to retain a proof of filing 
by stamping in and retaining an extra copy of the comments being 
filed.).
    b. For delivery in Baltimore, MD--Centers for Medicare & Medicaid 
Services, Department of Health and Human Services, 7500 Security 
Boulevard, Baltimore, MD 21244-1850.
    If you intend to deliver your comments to the Baltimore address, 
please call telephone number (410) 786-7195 in advance to schedule your 
arrival with one of our staff members.
    Comments mailed to the addresses indicated as appropriate for hand 
or courier delivery may be delayed and received after the comment 
period.

FOR FURTHER INFORMATION CONTACT: Mary Sowers, (410) 786-6814.

SUPPLEMENTARY INFORMATION:
    Inspection of Public Comments: All comments received before the 
close of the comment period are available for viewing by the public, 
including any personally identifiable or confidential business 
information that is included in a comment. We post all comments 
received before the close of the comment period on the following Web 
site as soon as possible after they have been received: http://www.regulations.gov. Follow the search instructions on that Web site to 
view public comments.
    Comments received timely will also be available for public 
inspection as they are received, generally beginning approximately 3 
weeks after publication of a document, at the headquarters of the 
Centers for Medicare & Medicaid Services, 7500 Security Boulevard, 
Baltimore, Maryland 21244, Monday through Friday of each week from 8:30 
a.m. to 4 p.m. To schedule an appointment to view public comments, 
phone 1-800-743-3951.

I. Overview

    We are issuing this advance notice of proposed rulemaking (ANPRM) 
to announce our intention to publish a proposed rule and solicit public 
comments on the changes necessary to provide States the option to 
design home and community-based services (HCBS) waiver programs serving 
more than one target population. We are particularly interested in 
receiving comments on how removal of the existing regulatory barrier 
regarding target groups may increase a State's ability to design 
service packages based on need, rather than diagnosis or condition. 
Furthermore, we are interested in receiving comments on how this change 
may affect the State's ability to serve individuals requiring an 
institutional level of care and may facilitate compliance with the 
Americans with Disabilities Act of 1990 (ADA). Title II of the ADA 
prohibits discrimination on the basis of disability and the Supreme 
Court ruled in Olmstead v. L.C., 527 U.S. 581 (1999), that unnecessary 
institutionalization may constitute discrimination under the ADA. Many 
States have used the home and community-based services waiver as a 
component of their Olmstead compliance efforts and we are interested in 
receiving comments about how this change may affect these efforts. We 
are intending to propose this change in an effort to remove barriers to 
person-centered, needs-based service delivery methods. Consequently, we 
are also hoping to hear from interested parties regarding 
recommendations to strengthen person-centered principles and practices 
for the successful operation of any HCBS waiver program, including 
those that may serve individuals based upon identified needs, rather 
than diagnosis.
    It is also our intention to publish as a part of the proposed rule 
requirements related to identifying the home and community-based 
character of the settings in which HCBS participants

[[Page 29454]]

reside and/or receive services. During the development of the 
regulation for the new State plan HCBS benefit under section 1915(i) of 
the Social Security Act \1\ (the Act), we received, as solicited, 
extensive comments on this issue. In preparation of this ANPRM, we took 
these comments into consideration and are contemplating publication of 
a proposed rule that would provide that States must define, and CMS 
approve, standards for home and community under HCBS waivers. Many 
commenters asked for a deliberative stakeholder process for developing 
criteria for home and community standards. This announcement provides 
advance notice of such a process in regard to HCBS waivers, and 
provides an opportunity for parties to express interest in 
participating.
---------------------------------------------------------------------------

    \1\ 73 FR 18676, http://edocket.access.gpo.gov/2008/pdf/08-1084.pdf.
---------------------------------------------------------------------------

II. Background

    Section 1915(c) of the Social Security Act (the Act) authorizes the 
Secretary of Health and Human Services to waive certain specific 
Medicaid statutory requirements so that a State may offer HCBS to 
State-specified group(s) of Medicaid beneficiaries who meet a level of 
institutional care that is provided under the Medicaid State plan. This 
provision was added to the Act by the Omnibus Budget and Reconciliation 
Act (OBRA) of 1981 (with a number of subsequent amendments). 
Regulations were published to effectuate this statutory provision, with 
final regulations issued in the mid-1990s.

A. Removing Regulatory Barrier To Designing 1915(c) Waivers Based on 
Needs Rather Than Diagnosis or Condition

    Section 1915(c) of the Act authorizes the Secretary to waive 
section 1902(a)(10)(B) of the Act, allowing States to waive 
comparability and target an HCBS waiver program to a specified 
Medicaid-eligible group or sub-group who would otherwise require an 
institutional level of care. A section 1915(c) waiver may currently 
only serve one of the three target populations identified in 
regulations at 42 CFR Sec.  441.301. These three target groups are: 
Aged or disabled, or both; Mentally retarded or developmentally 
disabled, or both; and Mentally ill. States must develop separate 
1915(c) waivers in order to serve more than one of these populations. 
This regulatory provision has contributed to States offering waivers 
with service packages tailored to different groups of individuals based 
upon diagnosis, rather than the individuals' actual need for support.
    Because the three target populations outlined above are typically 
associated with a particular institutional level of care, the necessity 
to offer multiple separate waivers, is often framed as an inability to 
combine levels of care. For example, waiver costs for persons with 
developmental disabilities are most frequently compared to costs of 
Intermediate Care Facilities for Persons with Mental Retardation or 
conditions closely related to mental retardation (ICFs/MR), while 
waiver costs for persons who are aged or with physical disabilities are 
compared to nursing facility costs. However, the impediment to serving 
more than one target group through an HCBS waiver relates to the 
division between the target groups required in the regulation, not the 
associated institutional settings where those target groups would 
otherwise receive services but for the provision of HCBS. For example, 
some individuals with the need for mental health services may be 
appropriately served in the community at the nursing facility level of 
care.
    Historically, in many cases pre-dating the 1915(c) HCBS waiver 
program, States have utilized a targeted approach to funding and 
budgeting for services for various populations. The CMS regulations 
published in the mid-1990s were modeled after those practices; the 
regulations reflect the funding approaches common in some State 
budgets. As the number of HCBS waivers across the country has grown to 
more than 350 waivers serving more than 1 million individuals, some 
States, with concurrence from stakeholder groups and individuals, have 
expressed a desire for the flexibility to combine these target groups 
in order to provide services based upon needs rather than diagnosis or 
condition, and for administrative relief from operating and managing 
multiple 1915(c) waiver programs.
    We have considered these issues and intend to propose to change the 
regulations in 42 CFR subpart G to allow States the flexibility to 
combine any of the three target groups in one HCBS waiver, or possibly 
to choose to offer waiver services to groups defined differently from 
the pre-defined targeting groups. The intended proposed regulatory 
change would not mandate any change in State criteria for targeting 
HCBS waivers, it would provide additional State flexibility. We expect 
that States would continue to appreciate the narrow targeting permitted 
under section 1915(c) of the Act, particularly for populations with 
high needs or receiving unique services. Under the change we are 
planning to propose, States would still have to determine that without 
the waiver, participants would require institutional level of care, in 
accordance with section 1915(c) of the Act. Likewise, the intended 
proposal to provide additional targeting flexibility for States will 
not affect the cost-neutrality requirement inherent in section 1915(c) 
waivers.
    In order to assure that individuals served by waivers targeting a 
broad range of conditions receive individualized care, we further plan 
to propose to require that: (1) The service planning process be person-
centered, and (2) the services specified in the plan of care be based 
upon the needs of the individual, not an average need among one target 
group. In addition, we intend to update the language in the regulation 
related to the target groups to reflect more contemporary, person-first 
language.
    We intend to propose this change to provide States with one 
additional tool to better serve their citizens, with person-centered 
delivery systems driven by need, not diagnosis or existing dedicated 
funding streams. A Federal regulatory change that permits combining 
targeted groups within one waiver, while optional for States and not an 
instantaneous change in State structures, would remove one barrier for 
States wishing to design waivers across various populations. We 
encourage comments on all aspects of the change we contemplate 
proposing, including its possible utility in enhancing State 
flexibility, minimizing administrative burden, facilitating compliance 
with the ADA, and facilitating a more needs-based service system.

B. Home and Community-Based Characteristics

    We are also intending to propose adjusting the regulations at 42 
CFR subpart G to describe expectations with regard to waiver 
participants being served in the home and community. We believe such 
proposed requirements would increase choice by providing waiver 
participants with notice of housing alternatives, and would create 
greater demand and market incentive for person-centered residential 
settings. Our intended proposed changes would include methods that 
States may follow to identify appropriate financing mechanisms for 
reducing the size of existing larger residences, divesting themselves 
or helping their providers divest themselves of sizable properties, and 
assisting providers' transition to smaller, more individualized 
settings. We invite commenters to suggest other

[[Page 29455]]

forms of technical assistance that CMS might provide to assist States 
in enhancing their efforts for optimal choice, control, and community 
integration for persons with disabilities and individuals who are 
aging.
    Since the inception of the 1915(c) HCBS waiver program in the 1981, 
the Centers for Medicare & Medicaid Services (CMS) (formerly known as 
Health Care Finance Administration (HCFA)) has supported State efforts 
to serve individuals in the least restrictive setting possible. 
However, home and community have not been explicitly defined, and as a 
consequence, some individuals who receive HCBS in a residential setting 
managed or operated by a service provider have experienced a provider-
centered and institution-like living arrangement, instead of a person-
centered and home-like environment with the freedoms that should be 
characteristic of any home and community-based setting. For some years, 
we have attempted to address this problem indirectly through our review 
of State service definitions for HCBS, with limited success. Through 
this ANPRM, we are announcing our intention to propose to affirmatively 
identify expectations for characteristics of home and community-based 
settings.
    The Deficit Reduction Act of 2005 created a new section 1915(i) of 
the Social Security Act. Section 1915(i) permits States to offer the 
HCBS specifically identified in section 1915(c)(4)(b) of the Act as a 
State plan option without requiring States to submit a waiver 
application. In addition to making HCBS available under the State plan, 
Congress expressed interest in assuring small, community-based home-
like environments through statutory requirements in section 6071 of the 
DRA of 2005 for the Money Follows the Person Demonstration Program. 
This program authorized grants to States to increase the use of HCBS, 
rather than institutional services, and required that community-based 
residential settings include no more than a specific limited number of 
residents.
    A regulatory change articulating CMS requirements for the nature of 
home and community-based residence under section 1915(c) HCBS waivers 
is necessary to ensure that the expectations for home and community 
characteristics are consistent across section 1915(c) of the Act and 
section 1915(i) authorities, and to ensure, most importantly, that 
individuals receiving HCBS have meaningful alternatives to 
institutional care, regardless of the section of the statute 
authorizing their services. Therefore, we are planning to propose 
adding to 42 CFR subpart G a requirement that individuals receiving 
HCBS waiver services must reside in the home or community, in 
accordance with either of two criteria enumerated below:
    <bullet> Resides in a home or apartment not owned, leased or 
controlled by a provider of any health-related treatment or support 
services; or
    <bullet> Resides in a home or apartment that is owned, leased or 
controlled by a provider of one or more health-related treatment or 
support services, and that meets standards for community living, as 
defined by the State and approved by the Secretary.
    We believe that this wording takes into account the variety of 
living situations that should be exempt from evaluation, and avoids 
indirect indicators such as number of residents. Only living situations 
in which a paid provider of services has opportunity to affect the 
degree of independence and choice will trigger application of 
additional State-defined and CMS-approved standards for community 
living. Standards for community living are to optimize participant 
independence and community integration, promote initiative and choice 
in daily living, and facilitate full access to community services. To 
ensure that these goals are met, standards must be developed through 
strong stakeholder input. We would be interested in receiving comments 
regarding strategies that States could employ to solicit and 
incorporate strong stakeholder input in their efforts to define 
standards for community living.
    We do not contemplate specifying criteria for home and community 
standards in the proposed regulation. We do solicit stakeholder 
interest in working with CMS to develop policy guidelines for State 
definitions.
    The intent of these guidelines is to create the necessary 
conditions so that individuals are able to reside in person-centered, 
home-like environments where they can enjoy all of the liberties of 
community living. We recognize that it is difficult for a State to 
develop and monitor standards related to the individual's standing in a 
landlord/tenant relationship or in homeownership without inadvertently 
omitting an arrangement that could be ideal for a particular 
individual. Furthermore, we recognize that the criteria listed above 
may not address the possibility that some providers may undertake 
efforts to avert state-established standards. In light of the 
complexity of this matter, the long-standing HCBS waivers operating in 
the country currently, and the many existing efforts to ensure that 
individuals are provided services in the setting where they have 
maximum choice, control and individual liberties, CMS solicits public 
input on strategies to address this issue of maximum individual choice 
and control for the 1915(c) waiver participants. We solicit comments on 
pathways that States may take to improve their systems to ensure that 
the settings where services are rendered are truly home and community-
based in nature, and that individuals are offered meaningful 
opportunities for community living. In addition, we solicit input on 
the potential impact of this issue on federally recognized tribes. We 
recognize that States will require assistance and technical guidance as 
they make changes, and also solicit comments on the nature of guidance 
and assistance that may be needed.

III. Intentions of This Notice

    We encourage comments that assist us in determining all 
implications of our contemplated proposed regulatory changes, and to 
assist us in constructing the regulations in a manner that provides 
appropriate guidance and incentives to result in meaningful, positive 
change for the nearly one million individuals currently served through 
1915(c) HCBS waivers.

IV. Response to Comments

    Because of the large number of comments we normally receive on a 
proposed rule, we are not able to acknowledge or respond to them 
individually. However, we will consider all comments we receive by the 
date and time specified in the DATES section of this advance notice of 
proposed rulemaking, and will address these comments in any proposed 
regulation that results from this advance notice.

V. Collection of Information Requirements

    This document does not impose information collection and 
recordkeeping requirements. Consequently, it need not be reviewed by 
the Office of Management and Budget under the authority of the 
Paperwork Reduction Act of 1995.

    Authority:  Secs. 1102 and 1871 of the Social Security Act (42 
U.S.C. 1302 and 1395hh).


[[Page 29456]]


    Dated: May 29, 2009.
Charlene Frizzera,
Acting Administrator, Centers for Medicare & Medicaid Services.
    Approved: June 16, 2009.
Kathleen Sebelius,
Secretary.
[FR Doc. E9-14559 Filed 6-19-09; 8:45 am]
BILLING CODE 4120-01-P