HCBS SETTINGS RULE AND IMPACT FOR ADULT DAY SERVICES PROVIDERS

In January 2014, the Centers for Medicare and Medicaid Services (CMS) issued a rule listing
criteria that must be met by Home and Community Based Services (HCBS) settings in which
Medicaid/Medical Assistance (MA) waiver services are provided. The purpose of the rule was to
enhance quality, add protections for consumers and to ensure services are being provided in
the most integrated settings. States and providers of HCBS settings must come into compliance
with the rule by March of 2019. Highlights of the rule include:
Regulations for section 1915(i) State Plan HCBS, including new flexibilities enacted under
the Affordable Care Act to offer expanded HCBS and to target services to specific
populations;
Requirements for HCBS-based settings appropriate for the provision of HCBS under
section 1915(c) HCBS waivers, section 1915(i) State Plan HCBS and section 1915(k)
(Community First Choice) authorities;
Requirements for person-centered planning across the section 1915(c) and 1915(i) HCBS
authorities;
Gives states the option to combine coverage for multiple target populations into one
waiver under section 1915(c), to facilitate streamlined administration of HCBS waivers
and to facilitate use of waiver design that focuses on functional needs;
Allows states to use a five-year renewal cycle to align concurrent waivers and state plan
amendments that serve individuals eligible for both Medicaid and Medicare, such as
1915(b) and 1915(c); and
Provisions to provide CMS with additional compliance options beyond waiver
termination for 1915(c) HCBS waiver programs.
The final rule requires that all home and community-based settings meet certain qualifications.
These include:
The setting is integrated in and supports full access to the greater community;
The setting is selected by the individual from among setting options;
The setting ensures individual rights of privacy, dignity and respect, and freedom from
coercion and restraint;
The setting optimizes autonomy and independence in making life choices; and
The setting facilitates choice regarding services and who provides them.

Katie Adult Day Center Policies and Procedures Manual 01-010.16

A Product of LeadingAge Minnesota October 2016
The final rule also includes additional requirements for provider-owned or controlled home and
community-based residential settings. These requirements do not pertain to Adult Day Services
settings.
Finally, the rule identifies settings that are presumed not to be home and community based
settings based on location of these services or the isolation of these services for participants.
Settings that are presumed to have institutional qualities include:
Settings located within a building that is publicly or privately owned that provides
institutional treatment. Example: An Adult Day Services program within the same
building as a nursing home.
Settings located on the grounds of or adjacent to a public institution. Example: An
Adult Day Service program attached to or next door to a publicly-owned (county, city,
state and federal) nursing home or hospital. This does not apply to nursing homes or
hospitals that are privately owned.
Settings that have the effects of isolating individuals from the broader community of
individuals not receiving Medicaid-HCBS Services. The HCBS Advisory Group will
determine what criteria providers will need to meet to conclude the setting does not
isolate those they serve.
For settings that meet the above bullet points, the state may overcome the presumption that a
setting has institutional qualities by submitting evidence to CMS demonstrating the institution
has the qualities of a home and community-based setting. When this happens the state
submits evidence to CMS, which triggers a process known as heightened scrutiny. Under this
process, CMS will review and determine if the setting meets criteria to overcome the
presumption.
New Construction:
CMS released a Frequently Asked Questions document (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) on guidance related to the HCBS
Settings Rule and new construction. The document states that settings presumed to have the
qualities of an institution cannot be determined to be compliant with the new settings
requirements until the setting is operational and occupied by beneficiaries receiving services.
To comply with the regulations, the requirements beyond the physical structure of the setting
itself must be met in order to receive funding from Medicaid waiver programs. For example,
individuals must first have the right to privacy, ability to make their own choices and have
access to the broader community. It was CMS expectation 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.

Katie Adult Day Center Policies and Procedures Manual 01-010.16

A Product of LeadingAge Minnesota October 2016