HCBS Rule Guidance Addresses New Construction

The Centers for Medicare and Medicaid Services (CMS) released additional FAQs on implementation activities related to meeting Home and Community Based Services (HCBS) Rule requirements for residential and non-residential home and community-based settings. The guidance discusses how CMS will review requests to build new settings in categories that are presumed to be institutional in nature. The guidance also identifies the components of person-centered planning regulatory requirements that are in effect now and those that are part of the home and community-based settings transition period in effect through March 2019.

CMS recognizes that “some states and providers have planned or have partially completed construction of new settings that fall into one of the three categories presumed to be institutional in nature.” Some of these affected states have asked if CMS can review the physical and programmatic designs of these proposed new settings and pre-approve them under heightened scrutiny to mitigate any downstream financial risk to the state or a developer. Such “pre-approval,” the guidance makes clear, is not possible, because “a heightened scrutiny review cannot rely

on program plans and proposed physical design descriptions alone.” CMS indicates that “a setting presumed to have the qualities of an institution cannot be determined to be compliant with the home and community-based setting regulatory requirements until it is operational and occupied by beneficiaries receiving services there.” This is because a number of the requirements in the rule are meant to “ensure that the individuals residing or receiving services in the setting actually experience the setting in a manner that promotes independence and community integration,” and compliance with these provisions is impossible to assess when no participants are actually experiencing the setting.  The guidance “encourage[s] states to contact CMS early in the planning stage of proposed development, to discuss any planned construction and related programming and to discuss risks that could trigger concerns that a setting may be unable to meet heightened scrutiny requirements, along with possible mitigation strategies,” but reiterates that “CMS will not be able…to provide any final determination that the proposed setting complies with regulatory requirements and that FFP will be available to match the facility’s eventual operational costs,” meaning that “states, providers or developers assume financial risk regarding new and planned construction.”

CMS says that its “expectation [was] that after the publication of the final regulation, stakeholders would not invest in the construction of settings that are presumed to have institutional qualities, but would instead create options that promote full community integration.” Recognizing “that there may be some locations where the ability to construct additional settings in which Medicaid-funded HCBS would be provided may be significantly limited, such as heavily built-up urban areas, states may request a heightened scrutiny review of newly operational settings meeting any of the presumed institutional scenarios described in the regulation.” However, CMS “strongly encourages states to limit the growth of these settings.”

The FAQs also reiterate previous guidance regarding which specific settings the HCBS regulation defines as requiring heightened scrutiny. Settings presumed to have institutional qualities include: 1) settings located in a building that is also a publicly or privately operated facility that provides inpatient institutional treatment; or 2) settings located on the grounds of, or immediately adjacent to, a public institution; or 3) settings that have the effect of isolating individuals from the broader community of individuals not receiving HCBS. CMS republishes the examples of settings that may have the effect of isolating beneficiaries that originally appeared in guidance found in the HCBS Tooklit. These examples include:

  • A setting designed to provide multiple services/activities to people with disabilities all on the same site (e.g., housing, day services, social, recreational activities, medical and behavioral services, etc.);
  • A setting using interventions or restrictions deemed unacceptable in Medicaid funded institutional settings (e.g., seclusion);
  • A farmstead or disability-specific farm community where individuals have limited access to the broader community outside the farm; and
  • A gated/secured community for only people with disabilities and the staff working with them, where the majority of their residential, day supports and other services are provided within the perimeters of that community and regular access to the broader community is limited.

CMS points out that “requests for heightened scrutiny reviews should only be submitted by a state when the state can provide the necessary information and documentation verifying what the setting has done to overcome qualities of an institution and to come into compliance with the requirements of a home and community-based setting.” Settings presumed to be institutional in nature added to an HCBS waiver or state plan option on or after March 17, 2014 “must be submitted for approval through the heightened scrutiny process prior to being used as part of an existing or new HCBS program [or] the institutional presumption will stand.” However, CMS also indicates that such setting s cannot make use of the transition period: “any setting in which services were not being provided under an approved state plan, waiver or demonstration as of March 17, 2014 must be in compliance with the regulations for HCBS settings by the effective date of the program.”

The FAQs also provide clarity about provisions related to person centered planning to which the transition period is applicable. While reiterating that the requirement that each participant has a person centered plan that meets the standards of the rule “took effect on March 17, 2014 for the 1915(c) waivers and 1915(i) HCBS state plan options, and on July 6, 2012 for the 1915(k) Community First Choice programs,” CMS clarifies that the settings provisions “that allow for limitations to be implemented on the qualities of a home and community-based setting that is provider owned or controlled, for health and safety issues of residents,” as long as the modifications “meet the criteria set forth in the regulation and [are] documented in the Person-Centered Service Plan” are subject to the transition period because they involve “modification to the required qualities in home and community-based settings.”

FMI: The FAQs can be found at https://www.medicaid.gov/medicaid-chip-program-information/by-topics/long-term-services-and-supports/home-and-community-based-services/downloads/faq-planned-construction.pdf