CMS issued new guidance to clarify where Medicaid beneficiaries can receive home- and community-based services as defined in a 2014 regulation. The guidelines in the HCBS final rule establishes new reimbursement criteria.

The goal is to move Medicaid beneficiaries into the community rather than in nursing facilities. This is a game changer for certain settings such as assisted living communities, and group homes that have been providing certain services under Medicaid waivers. Now, they must meet a higher standard of proof.

“We believe our revised guidance strikes the appropriate balance to protect individual choice while maintaining the integrity of home- and community-based funding,” CMS Administrator Seema Verma said.

Under the new guidance, a setting that is isolating individuals is defined as a facility that limits any opportunities for patients and residents to interact with the broader community.

“Even well-intentioned policies from Washington often lack the flexibility needed to work for every state, community, setting or family,” CMS Administrator Seema Verma said in a statement. “The implementing guidance issued under the prior administration was simply too prescriptive and unfairly singled out certain settings, causing unnecessary anxiety for many beneficiaries, families and providers. We believe our revised guidance strikes the appropriate balance to protect individual choice while maintaining the integrity of home- and community-based funding.”

2019 Updated Heightened Scrutiny Guidance

On March 22, 2019, CMS issued an updated guidance and set of FAQs revising and replacing, in large part, its previous guidance on the heightened scrutiny standard and settings that have the effect of isolating individuals from the broader community. Overall, the guidance takes a much more holistic view at such communities, providing states with greater flexibility to promote choice and identify the setting that is right for the individual. Of note, CMS re-wrote the list of factors/characteristics which the agency will take into account in determining whether a setting may have the effect of isolating individuals receiving HCBS from the broader community:

Previous Guidance New Guidance
The setting is designed specifically for people with disabilities, and often even for people with a certain type of disability. Due to the design or model of service provision in the setting, individuals have limited, if any, opportunities for interaction in and with the broader community, including with individuals not receiving Medicaid-funded HCBS.
The individuals in the setting are primarily or exclusively people with disabilities and on-site staff provides many services to them. The setting restricts beneficiary choice to receive services or to engage in activities outside of the setting.
Settings that isolate people receiving HCBS from the broader community may have any of the following characteristics:

· The setting is designed to provide people with disabilities multiple types of services and activities on-site, including housing, day services, medical, behavioral and therapeutic services, and/or social and recreational activities.

· People in the setting have limited, if any, interaction with the broader community.

· Settings that use/authorize interventions/restrictions that are used in institutional settings or are deemed unacceptable in Medicaid institutional settings (e.g. seclusion).

The setting is physically located separate and apart from the broader community and does not facilitate beneficiary opportunity to access the broader community and participate in community services, consistent with a beneficiary’s person-centered service plan.

Source: Foley Hoag, LLP

March 2022 is the deadline by which all states must have transition plans to ensure that settings receiving certain Medicaid funding meet federal HCBS standards.

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