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From Health Reform WK-EDGE, April 3, 2019

FAQs provide clarity on settings for home- and community-based services

By Patricia K. Ruiz, J.D.

CMS discusses instances where individuals are isolated from receiving Medicaid home- and community-based services because of institutional settings.

In a set of Frequently Asked Questions (FAQs) issued by CMS regarding the January 2014 home and community-based settings final rule, CMS discusses settings that have the effect of isolating individuals receiving Medicaid home- and community-based services (HCBS) from the broader community of individuals not receiving such services. These presumptively institutional settings are subject to heightened scrutiny reviews. The guidance provides flexibility to states while streamlining implementation efforts related to HCBS regulation (CMS Letter, SMD #19-001, March 22, 2019).

Institutional and isolating settings. Section 2401 of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) allows states to provide HCBS to Medicaid recipients under a waiver. HCBS regulations provide three categories of residential or non-residential settings presumed to have the qualities of an institution to which the heightened scrutiny process applies: (1) settings located in a building that is also a publicly or privately operated facility providing inpatient institutional treatment; (2) settings in a building located on the grounds of or immediately adjacent to a public institution; and (3) any other settings that have the effect of isolating individuals receiving Medicaid HCBS from those not receiving Medicaid HCBS. To determine whether a setting isolates HCBS beneficiaries from the broader community, CMS takes into account factors such as whether individuals have limited, if any, opportunities for interaction in and with the broader community, whether the setting restricts beneficiary choice to receive services or engage in activities outside of the setting, and the location of the setting relative to the broader community. States may identify additional factors but must clarify any additional characteristics of isolation to give stakeholders a clear understanding of what the state considers to be isolating.

The FAQs state that settings located in rural areas are not automatically presumed to have qualities of an institution and are not considered by CMS to be automatically isolating to HCBS beneficiaries.

Ensuring provider compliance. States have until March 17, 2022, to ensure provider compliance with the regulatory settings criteria. In this timeframe, states should determine when to conduct assessments of settings to determine those that are isolating. Settings determined to be isolating may implement remediation to comply with regulatory criteria. If completed by July 1, 2020, there is no need for states to submit information on the setting to CMS for a heightened scrutiny review. The setting should be identified in the state’s statewide transition plan for public comment or identified in information disseminated separately from the plan for public comment.

The FAQs provide promising practices for remediating settings identified as being isolating. It also discusses HIPAA-related privacy concerns states should consider in soliciting public input on settings determined to overcome the institutional presumption of isolating individuals receiving HCBS.

Heightened scrutiny review. In its FAQs, CMS provided the strategy it will utilize in performing the heightened scrutiny reviews. In submitting requests for such review, states should provide evidence of how the state determined that a setting overcomes the presumption that it has the qualities of an institution, focusing on the qualities of the setting and how the setting is integrated in and supports access of individuals receiving HCBS into the broader community. The FAQs provide a link to exploratory questions and examples of information the state might include.

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