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CMS clarifies use of Medicaid funds in home, community-based settings

January 14, 2014
by Bob Gatty
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A new regulation issued January 10 by the Centers for Medicare & Medicaid Services (CMS) is designed to assure Medicaid financial support for seniors and individuals with disabilities living in their homes or community-based facilities.

Modified from earlier versions, the new rule was immediately lauded by the American Health Care Association and the National Center for Assisted Living (AHCA/NCAL), which said the original version could have forced dislocation of seniors and disabled individuals living in assisted living and residential care centers.

“This is a major relief for thousands of seniors and individuals with disabilities residing in member centers across the country,” said Mark Parkinson, AHCA/NCAL president and CEO. “We saw the critical nature of this rule and worked with our members and other stakeholders to educate CMS about this potential crisis. Our goal was to ensure residents would be able to remain in place at the assisted living and residential care communities they and their families had initially chosen.”

According to AHCA/NCAL, the early draft of the regulation could have potentially displaced the majority of the 139,000 individuals who rely on Medicaid and live in assisted living and residential care communitie

In its Fact Sheet accompanying the regulation, CMS credits “stakeholder engagement” with helping to improve its final product. “CMS’ definition of home and community-based settings has benefited from and evolved as a result of this stakeholder engagement,” CMS wrote.

CMS said that in the rule it moved away from defining home and community-based settings by “what they are not,” and toward defining them by the nature and quality of individuals’ experiences, establishing a more “outcome-oriented” definition rather than one based solely on a setting’s location, geography or physical characteristics.

The final rule requires that to qualify, home and community-based settings must be integrated in and support full access to the greater community; ensure individual rights of privacy, dignity and respect and freedom from coercion and restraint; optimize autonomy and independence in making life choices; facilitate choice regarding services and who provides them.

Provider-owned or controlled facilities must meet these requirements:

  • The individual has a lease or other legally enforceable agreement providing similar protections;
  • The individual has privacy in their unit, including lockable doors, choice of roommates and freedom to furnish or decorate the unit;
  • The individual controls his/her own schedule, including access to food at any time;
  • The individual can have visitors at any time; and
  • The setting is physically accessible.

The rule excludes nursing facilities, institutions for mental disease, intermediate care facilities for individuals with intellectual disabilities and hospitals because other Medicaid funding authority already covers those facilities.

It also identifies other settings presumed to have institutional qualities and do not meet the threshold for coverage. These include those in a publicly or privately owned facility that provides inpatient treatment on the grounds of, or immediately adjacent to, a public institution; or that have the effect of isolating individuals receiving Medicaid-funded support from those who do not receive such support.

The final rule includes a transitional process for states to ensure that their waivers and state plans meet its requirements. CMS said it expects states to transition to the new settings requirements in as brief a period as possible and to demonstrate substantial progress during any transition period. CMS will give states up to one year to submit a transition plan and may approve plans for up to five years, as supported by individual states’ circumstances. CMS said it will provide technical assistance to help states comply.

“People with disabilities and older adults have a right to live, work and participate in the greater community,” said Health and Human Services Secretary Kathleen Sebelius.  She said the new rule “will help ensure that all people participating in Medicaid home and community-based services programs have full access to the benefits of community living.”

The new rule comes as a result of the Affordable Care Act in support of the 2009 HHS Community Living Initiative.

See also: CMS issues final rule about home- and community-based programs