A new proposed definition of home- and community-based services (HCBS) settings would give states more leeway to include assisted living and other residential care options in their Medicaid programs than a previously published definition, according to the National Center for Assisted Living (NCAL).

The new definition, issued late yesterday by the Centers for Medicare & Medicaid Services (CMS), was published as part of a final rule implementing the Medicaid Community First Choice (CFC) Option. Although the CFC rule is final, the revised definition of HCBS settings is not final. CMS will issue another proposed rule to solicit additional public comment on the revised definition of settings.

“While some serious issues remain to be addressed, the new proposed definition of HCBS settings is much more workable than what was previously proposed,” said Karl Polzer, NCAL’s senior director of policy.

Confusion and disagreement about the initial proposed definition of HCBS settings prompted CMS’ decision to solicit additional public comment in the future. According to the agency, “the proposed provisions caused more confusion and disagreement than clarity, and we believe further discussion and consideration on this issue are necessary.”

Therefore, the agency said in the rule that it intends to “issue a new proposed regulation that will provide setting criteria for CFC that we developed in light of the comments received and to invite additional public comment on our proposal.”

“After an initial reading, it is apparent that CMS has addressed many of our concerns and that the revised language gives states more latitude to include assisted living and other residential care options,” Polzer said. “Over the past year, NCAL and many other organizations have expressed deep concerns that the definitions of HCBS settings in the proposed CFC rules, as well as proposed rules for the Medicaid 1915(c) program, would prevent most assisted living settings from participating in the Medicaid program, thereby eliminating an important long term care choice for seniors.”

The CFC state plan option, which was authorized by the Affordable Care Act, provides an incentive for states to expand their Medicaid coverage for person-centered home- and community-based attendant services and supports. States that elect the CFC option are eligible for a six percentage point increase in their federal Medicaid match rate. Individuals who require an institutional level of care are eligible for the services, which will be offered in community-based settings.

CMS also stated in the rule that it plans to propose that “home- and community-based settings do not include the following: a nursing facility; an institution for mental diseases; an intermediate care facility for persons with mental retardation; a hospital providing long term care services; or any other locations that have qualities of an institutional setting, as determined by the secretary." 

CMS says that the CFC option is in full effect and that it “will rely on the proposed setting provision as we review new 1915(k) state plan options and we will fully expect states to comply with the setting requirements and design and implement the benefit accordingly.”

CMS also restated its intent to apply the criteria developed for Medicaid HCBS settings to sections 1915(c) and 1915(i) once those rules are finalized.

Read the final rule implementing the CFC program at: http://www.ofr.gov/OFRUpload/OFRData/2012-10294_PI.pdf.