Home and Community Based Services


The Department of Health and Human Services added a submission to the Federal Register earlier this year that many states find concerning. Among many other things, Federal Register Vol. 79, No. 11 dated January 16, 2014, addresses Home and Community Based Services (HCBS). It represents a final rule addressing many Medicaid laws under which funding is available for HCBS programming. The rule seeks to achieve balance in consumer outcomes that utilize this service, enhanced quality outcomes, and assurances that consumers utilizing any of these services have a full access to the benefit in addition to clarifying where these services can be rendered. A little background may be useful.


Purposes of HCBS

The purpose of HCBS is to provide opportunities for Medicaid beneficiaries to receive services in their own home or community. These programs serve a variety of targeted populations groups, such as people with mental illnesses, intellectual or developmental disabilities, and/or physical disabilities.

The HCBS regulation intends to provide new flexibilities to programming and service areas, limit service programming in institutional settings, provide more community service area settings as permissible places to provide services, develop “person centered” care planning whenever possible, streamline the governmental waiver process that states must go through to be able to provide HCBS programming and provide states with more options to provide multiple targeted populations into one state waiver (instead of multiple waivers), thereby offering services as well as creating waiver designs that focus on functional needs.


Waivers are a special designation whereby states, very simply, are asking CMS for permission to provide a program or an array of services to a select group of the population. This program or array of services is typically outside the narrow path to coverage under the Medicaid Program and the Social Security Act. National law is established to dictate to states what services they must provide. Waivers allow states to act independently in providing services outside of the narrow path of the law because perhaps the residents in their state act and behave differently. This flexibility allows states to provide targeted programming to individuals that would benefit from these services, allowing them to live more independently with this assistance. (This is very simple definition of a complex principle and funding source. The most common waivers are 1915(c) and 1915 (i) State Plan Amendment.)

Effect of Federal Register Vol. 79

Many of the provisions of this almost year old release are now making their way through Department of Health and Human Service offices around the country. CMS has asked that states examine the HCBS programming that is provided in accordance with their State Plan and compare the policies governing them to the “new” regulations in place. States should then score each program as being “compliant” or “non-compliant.” For programming that is not in compliance with the new regulations, states should offer a plan to achieve compliance and are being allowed a five year period to meet those goals.

Of concern to CMS is that HCBS programming may not be occurring in the home or community, as described in a previous Federal Register submission issued in May 2012 which spoke of a “community first benefit” concept. Instead, many of the current structures are forcing beneficiaries to become institutionalized, travel unnecessarily, or forgo the care to which they are entitled. The new regulation was issued to enforce the community first choice, restricting HCBS in institutional settings as well as providing for a person-centered service plan. Further, to quote CMS, the programming and service area must have the following characteristics:

  1. The setting is integrated in and supports full access of individuals receiving Medicaid HCBS to the greater community, including opportunities to seek employment and work in competitive integrated settings, engage in community life, control personal resources, and receive services in the community, to the same degree of access as individuals not receiving Medicaid HCBS.
  2. The setting is selected by the individual from among setting options including non-disability specific settings and an option for a private unit in a residential setting. The setting options are identified and documented in the person-centered service plan and are based on the individual’s needs, preferences, and, for residential settings, resources available for room and board.
  3. Ensures an individual’s rights of privacy, dignity and respect, and freedom from coercion and restraint.
  4. Optimizes, but does not regiment, individual initiative, autonomy, and independence in making life choices, including but not limited to, daily activities, physical environment, and with whom to interact.
  5. Facilitates individual choice regarding services and supports, and who provides them.

In a provider-owned or controlled residential setting, in addition to the qualities specified above, the following additional conditions must be met:

  1. The unit or dwelling is a specific physical place that can be owned, rented, or occupied under a legally enforceable agreement by the individual receiving services, and the individual has, at a minimum, the same responsibilities and protections from eviction that tenants have under the landlord/tenant law of the State, county, city, or other designated entity. For settings in which landlord tenant laws do not apply, the State must ensure that a lease, residency agreement or other form of written agreement will be in place for each HCBS participant, and that the document provides protections that address eviction processes and appeals comparable to those provided under the jurisdiction’s landlord tenant law.
  2. Each individual has privacy in their sleeping or living unit:
    1. Units have entrance doors lockable by the individual, with only appropriate staff having keys to doors.
    2. Individuals sharing units have a choice of roommates in that setting.
    3. Individuals have the freedom to furnish and decorate their sleeping or living units within the lease or other agreement.
  3. Individuals have the freedom and support to control their own schedules and activities, and have access to food at any time.
  4. Individuals are able to have visitors of their choosing at any time.
  5. The setting is physically accessible to the individual.
  6. Any modification of the additional conditions specified in items 1 through 4 above must be supported by a specific assessed need and justified in the person-centered service plan. The following requirements must be documented in the person-centered service plan:
    1. Identify a specific and individualized assessed need.
    2. Document the positive interventions and supports used prior to any modifications to the person-centered service plan.
    3. Document less intrusive methods of meeting the need that have been tried but did not work.
    4. Include a clear description of the condition that is directly proportionate to the specific assessed need.
    5. Include regular collection and review of data to measure the ongoing effectiveness of the modification.
    6. Include established time limits for periodic reviews to determine if the modification is still necessary or can be terminated.
    7. Include the informed consent of the individual.
    8. Include an assurance that interventions and supports will cause no harm to the individual.

Further, CMS has provided examples of locations where HCBS service cannot be performed:

  1. A nursing facility;
  2. An institution for mental diseases;
  3. An intermediate care facility for individuals with intellectual disabilities;
  4. A hospital; or
  5. Any other locations that have qualities of an institutional setting, as determined by the Secretary.

As you can see, the rules are quite complex and states and providers have been quite busy examining their programming to ensure that they are in full compliance, or have a plan in place that will transition them to compliance within a five year period.

States are requested to submit a “Statewide Transition Plan” (STP) to CMS whenever the state is seeking for a renewal of an existing program or amended program. These are usually submitted annually to CMS. However, if an existing waiver or State Plan amendment hasn’t lapsed, CMS is asking states to submit an STP by March 17, 2014 and that they be in compliance with these new regulations no later than March 17, 2015.


These rules are very complex, but the point of them is to ensure that beneficiaries receive the care to which they are entitled – and in the manner and location that they deserve. Many of us working in this industry are watching the states’ reaction to these recent rules with great interest to see if they have the impact that was intended.

For more information, please contact your BNN advisor at 1.800.244.7444.

Disclaimer of Liability: This publication is intended to provide general information to our clients and friends. It does not constitute accounting, tax, investment, or legal advice; nor is it intended to convey a thorough treatment of the subject matter.

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