CMS HCBS Setting Final Rule: Impact on Adult Day Services

Regulation | January 22, 2017 | by Peter Notarstefano

The HCBS Setting Requirements final rule was released January 10, 2014 by the Centers for Medicare & Medicaid Services. This rule will gave states more flexibility on how they are able to use federal Medicaid funds to pay for home- and community-based services (HCBS) to meet the needs of Medicaid enrollees, particularly the elderly and disabled.

The HCBS Setting Requirements final rule CMS–2249–F; CMS–2296–F was released January 10, 2014, by the Centers for Medicare and Medicaid Services (CMS). 

This rule will give states more flexibility on how they are able to use federal Medicaid funds to pay for home and community-based services (HCBS) to meet the needs of Medicaid enrollees, particularly the elderly and disabled. 

The final rule goes into effect on March 17, 2014.

HCBS Settings Requirements Final Rule: What it Does

According to CMS, the rule is meant to ensure that Medicaid's home and community-based services programs in residential and non-residential settings provide full access to the benefits of community living and offer services in the most integrated settings. 

The rule mainly contains criteria that relate to residential settings, but Ralph Loller, director, Division of Long Term Services and Supports at CMS, stated that there will be additional guidance on how the rule impacts non-residential providers, such as adult day centers.

States that pay for home and community-based services under 1915(c), 1915(i), Community First Choice (1915k) and 1115 Medicaid will be required to determine if provider-owned/controlled HCBS that are located in, on the grounds of, or immediately adjacent to nursing facilities, institutions for mental disease, intermediate care facilities for individuals with intellectual disabilities and hospitals fit the criteria in the final rule to be eligible to receive Medicaid waiver funding.

There are a number of states that allow adult day programs in these settings. These states will be subjected to additional scrutiny by CMS to ensure that the setting is home and community-based and does not have the qualities of an institution. 

CMS is saying that the state must be in compliance with the final rule in order for providers to receive waiver funds.

CMS will allow states using 1915(c), 1915(i), Community First Choice HCBS funding for a maximum of a 1-year period to submit a transition plan for compliance. The final rule does provide a transition plan process and an HCBS waiver review process. 

There will be an opportunity for public comment on the state transition plan. HCBS providers that receive Medicaid funding under 1115 waivers will have to abide by the regulations either when the 1115 waiver is up for approval by CMS or when the state applies for a new 1115 waiver. 

CMS will allow states up to 5 years to be in full compliance with their approved transition plan.  

Additional guidance on the transition process will be forthcoming from CMS. There will also be a Frequently Asked Questions page on the CMS website on the Home- and Community-Based Setting Requirements Final Rule.  

LeadingAge will be providing more information on the implementation of the HCBS Setting Requirements final rule.