CMS Revises Guidance on Heightened Scrutiny for New Construction

Topics: Federal News, HCBS, HCBS Rule, Medicaid,

The Centers for Medicare & Medicaid Services (CMS) has issued an Informational Bulletin that describes how heightened scrutiny applies to construction of new settings that are presumed institutional as outlined in the home and community-based services (HCBS) settings rule at 42 CFR 441.301(c)(5). The Bulletin revises prior guidance issued in 2016 to now allow states to submit a setting to CMS for heightened scrutiny review prior to Medicaid beneficiaries receiving services in the setting. CMS also clarifies in the Bulletin when Federal Financial Participation (FFP) for Medicaid-funded HCBS will be available upon CMS determination that a newly constructed presumptively institutional setting adheres to the home and community-based settings requirements.

In the guidance, CMS “encourages states, providers, builders and other stakeholders to thoughtfully consider alternatives to new development of presumptively institutional settings.” However, CMS indicates that it now believes that “an accurate analysis of a setting’s adherence to the regulatory criteria can be performed at the state and federal levels based on the experiences of non-Medicaid beneficiaries.” For example, the facility might be able to show that the setting chosen by the private pay individual “is integrated in and supports full access of individuals receiving services to the greater community, including opportunities to seek employment and work in competitive integrated settings, and that individuals engage in community life, control personal resources, and receive services in the community.” Therefore, with respect to newly constructed facilities, “CMS can perform a heightened scrutiny review based on how non-Medicaid beneficiaries are receiving services in the new setting at the time a state conducts and submits information for a heightened scrutiny review.” CMS does not establish a standard for the number of individuals who must be receiving services from the setting in order for a heightened scrutiny review to be performed, but says it must be “sufficient so that the state is able to obtain data to demonstrate that the setting adheres to the regulatory criteria and overcomes its institutional presumption.”

Should CMS determine that a new presumptively institutional setting overcomes that presumption and adheres to the home and community-based settings criteria, Federal Financial Participation (FFP) for Medicaid-funded HCBS will be available according to the following timelines:

  • For new settings for which the heightened scrutiny assessment includes Medicaid beneficiaries, upon CMS approval, FFP will be available for dates of service going back to the date the state determined the setting complied with the regulatory criteria.
  • For new settings for which the heightened scrutiny assessment is based on non-Medicaid beneficiaries, and the state is able to confirm that all Medicaid regulatory requirements either were met or would have been met if the services had been furnished to Medicaid beneficiaries, FFP will be available for expenditures associated with dates of services beginning on the date the setting began providing services to Medicaid beneficiaries.
  • For new settings for which CMS determines that additional remediation is necessary for the setting to comply with the regulatory criteria, FFP will be available for expenditures associated with dates of service beginning on the date the state confirmed all remediation was completed and that the setting demonstrates compliance with the regulation.

FMI: The Bulletin is available at https://www.medicaid.gov/federal-policy-guidance/downloads/cib080219.pdf.