CMS Issues Final Rule Regarding Home and Community-Based Services
January 24, 2014 02:36 PM
On January 16, the Centers for Medicare & Medicaid Services (CMS) issued a final rule (The Rule) simplifying the ability of states to administer their home and community-based services (HCBS) programs. The Rule was first published as a proposed rule in April 2008, and then published as a second proposed rule in May 2012. CMS had not previously finalized the Rule as it deemed the Rule non-compliant with the Affordable Care Act (ACA). In November 2013, The Office of Management and Budget (OMB) received the then-pending final rule for review from CMS. The National Council for Medicaid Home Care – a NAHC affiliate - reports on some of the Rule’s key provisions below:
Overview of HCBS
HCBS first became available in 1983, when it was created as a waiver alternative to institutional care under Medicaid through section 1915(c) of the Social Security Act (the 1915(c) option). In 2005, states were permitted to provide HCBS through the 1915(i) State Plan Option (the 1915(i) option), which allows states to provide HCBS without a waiver or demonstration. CMS states that “several” states have adopted such state plans, while 47 states plus Washington, DC have at least one 1915(c) waiver. Additional options for HCBS include 1915(j) Self-Directed Personal Assistance Services, and 1915(k) Community First Choice.
For details, click here.
Summary of the new rule on HCBS
The Medicaid rule triggers several changes in Medicaid HCBS in a number of different Medicaid home care programs. The new rule:
outlines the new HCBS option benefit that allows states to avoid the administrative burdens attached to waiver programs.
permits the combination of the existing three waiver target groups into a single waiver program to streamline the waiver process.
implements a provision in the ACA that authorizes a 5-year duration on demonstration projects or waiver programs that combine dual-eligible Medicare and Medicaid beneficiaries.
establishes a limited exception to the general provider payment rules by permitting state Medicaid programs to make payments to other parties to benefit the provider for items that are normally considered employee fringe benefits such as health insurance.
clarifies the standards for determining which residences meet the home and community-based setting requirements to qualify for HCBS payment on the variety of HCBS programs.
sets out standards for HCBS person-centered plans of care, process requirements for public input on changes to HCBS waiver programs and payment rates, and the individual’s right of choice of care setting.
The State Plan HCBS Benefit
This is a new benefit option under Medicaid. The primary advantage of this new benefit is that the states can simply elect it as an additional state plan benefit and avoid the administrative complexities involved in HCBS programs. The State Plan HCBS Benefit includes one or more of the following services: adult day health services, case management services, habilitation services, home health aide services, homemaker services, personal care services, respite care services, and “[o]ther services requested by the agency and approved by the Secretary as consistent with the purpose of the benefit.” For those with chronic mental illness, the services also contain one or more of the following: clinic services, day treatment or other partial hospitalization services, and psychosocial rehabilitation services.
Exclusion: Room and board is excluded from the benefit.
Preservation of state flexibility: The Rule preserves flexibility for states to provide HCBS under the 1915(i) state plan option. As shown above, CMS gives states flexibility in choosing “one or more” of several services. CMS declined to define what “other services” a state could provide under the state plan option, as “states have the flexibility to propose and define other specific services.” However, CMS opted to provide examples of “other services” in future guidance.
A critical element of this benefit is that the eligibility standards direct the benefit to individuals who require less than an institutional level of care. This is in stark contrast to waiver HCBS where it must be established that the individual qualifies based on a need for a nursing facility level of care.
There is also no “cost neutrality” requirement in this benefit, meaning the state does not need to establish that the individual or aggregate cost of care is less than or equal to an institutional level of care.
States are free to elect this option and to create or maintain HCBS waiver programs targeted to specific patient populations. However, it is very possible that states that elect this benefit will curtail or drop waiver programs. If that occurs, the rule sets out a series of procedural requirements designed to protect existing beneficiaries who may face changes in care access as a result.
Waiver process streamlined
Before this rule, states had to tailor each 1915(c) waiver to a separate target group, with those groups being: “Aged or disabled, or both; Individuals with intellectual or developmental disabilities, or both; and mentally ill.” Now, states can combine these target groups in its application for a 1915(c) waiver, as long as the state provides assurances that it can meet the “unique service needs” of all individuals encompassed in the waiver. States may find this change attractive as it should result in a reduction in paperwork and administrative workload. Some commenters on the proposed rule raised concern that states may end up favoring one population sector over another in filling waiver slots. CMS indicated that states must take steps to insure that such discrimination does not occur.
Five-year duals demonstrations
The Rule creates a 5-year period for approval or renewal of demonstrations and waivers for states to administer medical assistance to individuals dually eligible for Medicare and Medicaid (dual eligibles). Duals demonstrations exploded onto the Medicaid scene recently with more than half of the states moving in that direction already. The 5-year authorization is an indication that CMS not only recognizes the heavy investment that states need to make if they wish to initiate such a demo program, it also shows that CMS anticipates that dual demos are here to stay for the long term. Criticisms of the dual demos have included that they do not look like demos when they involve full state populations over a long term. However, a 5-year authorization would create stability for all the stakeholders including demo enrollees and contracting providers.
Provider payment reassignment
The Rule establishes an exception to a longstanding rule that prohibits reassignment of provider payments. The reassignment provision was originally intended to block providers from assigning their rights to Medicaid payment for services rendered to a third party. For example, the restriction prevents a home care company from assigning claims payments to a bank that had extended a line of credit to the provider.
The new exception permits states to make payments to a third party on behalf of the provider “for benefits such as health insurance, skills training and other benefits customary for employees.” One reason for the new exception is to address new home care delivery models, specifically consumer-directed care through public authority models or where the individual caregivers are unionized. In such circumstances, the state could decide to directly fund health insurance for the whole pool of workers rather than provide a payment rate that the individual may or may not use for purchasing health insurance. Currently, Illinois pays a union an amount to fund health insurance for unionized home care aides in a consumer directed model.
While it appears that his exception may be intended to benefit certain home care unions and the individual workers in that bargaining unit, it also presents the opportunity for states to address the emerging problems with the AC employer mandate. Our analyses shows that a sizeable majority of Medicaid-focused home care providers do not offer health insurance to nonprofessional caregivers due to low payment rates. This change in the rules would permit state Medicaid programs to secure health insurance for the workers directly and avoid the risk that increased provider payment rates do not go to the purchase of health insurance. That approach still raises Medicaid costs but it may do so at a lower level because of the volume purchase power of the state.
HCBS qualified care settings
Settings that Are HCB:The Rule specifies which “qualities” settings must have to be considered home and community based (HCB) under both waiver (1915(c)) and state plan HCBS (1915(i)) options. First, the setting must be integrated into the greater community, including providing access to employment and community life. In addition, the setting must allow the beneficiary to control her own personal resources, must give the beneficiary an option for living in a private unit in a residential setting, must ensure “privacy, dignity and respect, and freedom form coercion and restraint,” and also promote “individual initiative, autonomy, and independence.” Provider owned or controlled residential settings have additional requirements. The Rule also further defines what constitutes privacy in the sleeping or living unit.
Settings that Are Not HCB:The Rule, in addition to defining qualities that make a setting HCB, also lists several settings that are not HCB under both 1915(c) and 1915(i) options. These settings include: a hospital, a nursing facility, an institution for mental diseases, and intermediate care facility for individuals with intellectual disabilities, or “any other locations that have qualities of an institutional setting.”
Presumed Non HCB Settings: Additionally, the Rule creates a class of settings that are presumed to not be HCB settings under both 1915(c) and 1915(i) options. These settings include those in buildings that provide impatient institutional treatment, those in or near public institutions, “or any other setting that has the effect of isolating individuals receiving Medicaid HCBS from the broader community.” The state or other parties can rebut this presumption by demonstrating otherwise through a heightened scrutiny standard.
This rule development is an important advancement in Medicaid home care policy. Many Medicaid beneficiaries live in nontraditional settings such a congregate living arrangements, group homes, assisted living facilities, and continuing care retirement communities. These nontraditional residential settings have posed a problem for Medicaid in terms of providing home care within federal authority.
By using a “qualities” approach, CMS has not provided the bright-line standard that some wished for, but it has given states a big degree of flexibility in setting up home care programs that meet the needs of a very diverse Medicaid population. It recognizes that some Medicaid patients live in settings that provide the freedom and control equivalent to a single family residence justifying inclusion as a community setting eligible for HCBS benefits. At the same time, the setting standards ensure that institutional settings do not qualify.
Person Centered HCBS
Planning Process:Under the waiver, Community First Choice and state plan HCBS options, the new rule makes clear that the care planning process should be driven by that individual, with her legal representative assisting as necessary. That does not mean that the individual flies solo on care planning as CMS also makes clear that the individual should be supported by an appropriate team that would include health professionals, family, and friends. The key elements of the process is providing enough information so that the individual can make informed decisions, and having the process occur timely and at a place and time convenient to the individual.
Person Centered Service Plan:The person centered planning process generates a person centered service plan, or plan of care, for the individual. Among other things, the plan must reflect the individual’s preferences, reflect clinical and support needs, include goals and outcomes identified by the individual, and include the services and supports to assist in achieving those goals.
Independent Assessment: Under waiver HCBS, an independent assessment is also required to generate a service plan. The Rule stipulates requirements for this independent assessment, including that the assessment be conducted face-to-face, or telephonically if certain conditions are met.
The independent assessment cannot be done by the care provider because of conflict of interest concerns. However, an exception to this restriction is available in the event there are no separate assessment and care providers. This limitation will force some changes in existing programs where the assessment and care comes from a single source.
Needs-based criteria:To determine an individual’s eligibility for State Plan HCBS benefits, the state must establish needs-based criteria. The needs-based criteria “are factors used to determine an individual’s requirements for support.” An individual is eligible for such HCBS benefits only if they meet needs-based criteria for services in nursing facilities, intermediate care facilities for individuals with intellectual disabilities, and hospitals (long-term level of care criteria) under HCBS waivers. This is an important element under the new rules in that it may result in care service decisions that are based on needs rather than a budget.
The Rule requires states to “develop and implement an HCBS quality improvement strategy,” which includes a “continuous quality improvement process,” having an evidence-based nature, and measurements of individual outcomes.
Self-directed services option
As part of state Plan HCBS option, a state can elect to offer “self-directing HCBS,” meaning “services that are planned and purchased under the direction and control of the individual, including the amount, duration, scope, provider, and location of the HCBS.” The Rule stipulates the requirements necessary for the service plan for and functions in support of self-direction.
This self-directed services option appears to have similar self-direction elements as other already existing programs including: Cash and Counseling, Cash and Counseling for Veterans, the Veteran-Directed Home and Community-Based Services Program (VD-HCBS), and 1915(j) Self-Directed Personal Assistance Services. The assessment process must include elements related to an individual’s self direction capabilities and needs to permit successful self-direction when that is the delivery mode chosen by the individual.
Under the state Plan HCBS option, the Rule stipulates that states “must define in writing standards for providers (both agencies and individuals) of HCBS and for agents conducting individualized evaluation, independent assessment, and service plan development.”
The rule mandates that states must also devise conflict of interest standards for providers, and sets minimum standards for the states. Further, providers “performing independent assessments and plans of care” must be adequately trained. As devised, this rule gives great flexibility to the states in determining provider qualifications. There are benefits and risks to such discretionary authority in that care consistency may be impeded while local conditions may be better met.
Public Notice and Opportunity for Input
The rule sets out standards for process requirements for public input on changes to HCBS waiver programs and payment rates. Given the extent of changes that could be triggered by these new rules along with the instabilities in state Medicaid funding, these process requirements are key protections for both beneficiaries and providers. These protections include limitations on retroactive state plan approvals by CMS, advance notice of changes in the scope of benefits and payment rate changes, and relief from losses of benefits triggered by a state transitioning from one HCBS model to another.
For the full text of the Rule, click here.
The National Council on Medicaid Home Care welcomes the promulgation of the final rule. This Rule will help states in expanding their HCBS services by simplifying the process needed for approval as well as establishing new options for care. There is still much to know about the implementation of the standards in the rule. The Council looks forward to an active dialogue with CMS as it develops implementing guidelines.
The Council encourages providers to continue advocating for mechanisms to improve access to HCBS services through their state associations, as well as through state and federal governments. Home care providers are encouraged to keep abreast of HCBS developments in their states, and nationally, and to contact the Council with any questions or concerns.