CMS Home and Community Based Services (HCBS) Settings Rule: Part IImage Banner

CMS Home and Community Based Services (HCBS) Settings Rule: Part I

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CMS Home and Community Based Services (HCBS) Settings Rule: Part I

Laura Nuss, Senior Advisor, Foothold Technology

In March of 2014, the Centers for Medicare and Medicaid Services (CMS) issued the long-awaited final rules governing home and community based services (HCBS) provided by states under the Medicaid program. The two rules: Home and Community Based Services Waivers (CMS-2296-F ) and Home and Community Based State Plan Services Program, Waivers, and Provider Payment Reassignments (CMS-2249-F), have fueled much debate, action and consternation among the home and community based services (HCBS) community. In an attempt to demystify things a bit, I’ll be providing some policy information and sharing some advice for providers preparing for HCBS in a series of blog posts.

Let’s dive in with a quick overview of the rules themselves.


Policy Wonk Alert

According to CMS, the new settings rule which apply to the 1915 (c) HCBS Waiver Program, 1915 (i) HCBS State Plan Option and 1915(k) Community First Choice “enhances the quality of HCBS, provides additional protections to program participants, and ensures individuals receiving services HCBS programs have full access to the benefits of community living.” The final rules, among other things, define and describe the requirements for HCBS settings appropriate for the provision of HCBS programs. For the Home and Community Based Setting requirements, CMS establishes:

  • Mandatory requirements for the qualities of home and community based settings
  • Settings that are not home and community based
  • Settings presumed not to be home and community based, and
  • State compliance and transition requirements.


In defining and describing the setting requirements to qualify for Medicaid HCBS funding, rather than describing settings by size or type, CMS prescribes an outcome oriented definition of HCBS settings based on the “nature and quality of the participant’s experiences.”

Light BulbWhy an outcome oriented definition and what does this mean? This distinction came about following thousands of public comments as CMS struggled to define or describe what kinds of settings would be considered compliant under the new rules – rules that apply to older adults, people with Intellectual Disabilities/Developmental Disabilities (ID/DD), serious mental illness, traumatic brain injury and other disabilities – and as such people who may have different perspectives about what feels like “home and community”, or, what is desirable at different points in the lifespan. As an example, older adults might like living in an assisted living setting with other older adults where they enjoy companionship and the convenience of communal dining, but young adults with ID/DD might feel excluded from their friends, job opportunities and social activities and feel labeled and isolated by living in a larger congregate setting serving only people with ID/DD.

So the new rules instead attempt to describe the kind of experience a person should expect to have when they receive Medicaid funded HCBS services at a certain place rather than prescribe what types of settings would be allowable, with the exception of course being institutional settings (nursing homes, Intermediate Care Facilities for persons with IID, Institutions for mental diseases, and hospitals).


Policy Wonk Alert

Those requirements for all settings include that the home and community based setting:

  • Is integrated in and supports access to the greater community;
  • Provides opportunities to seek employment and work in competitive integrated settings, engage in community life, and control personal resources;
  • Ensures the individual receives services in the community to the same degree of access as individuals not receiving Medicaid home and community based services;
  • 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;
  • Utilizes person-centered service plans to document the options based on the individual’s needs, preferences; and for residential settings, the individual’s resources
  • Ensures an individual’s rights of privacy, dignity, respect, and freedom from coercion and restraint;
  • Optimizes individual initiative, autonomy, and independence in making life choices; and,
  • Facilitates individual choices regarding services and supports, and who provides them.

Settings presumed not to be home and community based have raised more debate and space for interpretation. Those settings are:

  • Settings in a publicly or privately-owned facility providing inpatient treatment;
  • Settings on the grounds of, or adjacent to, a public institution; and
  • Settings with the effect of isolating individuals from the broader community of individuals not receiving Medicaid HCBS.


It is the last setting, those that have the effect of isolating people from the broader community, that are challenging states and providers alike across the country. Some examples are the farms where people with autism live and work, new gated communities where people with ID/DD are living, socializing and engaging in recreational activities all within the community, and sheltered workshops and clubhouses for people with behavioral health challenges. In these settings, people with disabilities may be isolated from other members of the broader community. We’ll take a closer look at some best practices on evaluating residential and day settings in greater depth in upcoming blogs and webinars.

The timeframe on complying with these new rules varies from state to state and from rule to rule. States were expected to be in compliance with the person-centered planning requirements upon the effective date of the rule. In reality, many states are still working through the additional requirements that case management be “conflict free”, most often meaning the case manager or agency providing case management must be different than the provider agency delivering the HCBS service.

Why is this the case? For the new “settings” requirements, any new 1915 (c) HCBS waiver program, (i) or (k) Medicaid state plan HCBS program, must ensure that all service settings participating in the new program are in compliance at the time of the application to CMS seeking approval for the new program. Because of this, a number of states were forced to delay new, planned HCBS programs that were to include settings where compliance was in question. This was particularly true for ID/DD programs where new HCBS waivers were planned focusing on individual and family support, yet included existing large day programs and sheltered workshops as part of the service menu.

Where are we now? For existing Medicaid HCBS programs, CMS recognizes that the states will need time to evaluate and get each program into compliance. All states operating Medicaid HCBS services (that’s all 50 states and the District of Columbia in ID/DD services) must be in compliance with all aspects of the new settings rule no later than March 17, 2019. CMS is monitoring the states closely during the five-year transition period by requiring the states to submit statewide Transition Plans that describe in detail the state’s evaluation and remediation processes.

The first Transition Plan was due from each state on March 17, 2015. CMS must approve each plan, and the state is then required to report regularly to CMS the progress being made. As of August 31, 2016, CMS has provided initial approval for only four (4) Statewide Transition Plans (Kentucky, Ohio, Iowa and Delaware) and final approval following response to additional questions to only one state – Tennessee. This slow progress to date illustrates the complexity of these rules.
Each state must post its Transition Plan and any revisions in response to questions from CMS for public comment, and include the comments and responses in the Transition Plan. It is critical that the provider community, individuals and families receiving services and other involved stakeholders participate in this conversation.



About Foothold Technology 
Foothold Technology, an electronic record, EHR vendor and human services software provider, offers web-based software for human service providers that eases the burden of documentation, providing agencies with the freedom to focus on their Mission. More than 900 agencies nationwide count on Foothold’s AWARDS software to manage their services, including Mental Health, Alcohol & Substance Abuse, Intellectual & Developmental Disabilities, Homeless & Housing, Employment & Training, Seniors, Veterans, Youth & Family, and more. Having originated from three agencies in 2000, AWARDS is a complete electronic record and EHR software for human service providers that also supports administrative activities, including facilities maintenance, human resources, scheduling and alerts, audit reports, and automated billing. AWARDS offers full interoperability with any other federally certified system for participation in Health Information Exchanges (HIE) and RHIOs. It is also the only record-keeping system that is certified as both a Behavioral Health EHR software system and an HMIS software package (Homeless Management Information System). With roots and origins in human services, no software vendor is better prepared to support you than Foothold Technology. For more information, visit