The Centers for Medicare & Medicaid Services issued updated Medicaid guidance to states on administering regulations aimed at home- and community-based services (HCBS) for certain beneficiaries.

In a letter (PDF) addressed to state Medicaid directors, CMS said that 18 months of discussions with states and advocacy groups revealed that the original guidance was too “prescriptive” and was resulting in a loss of funding for many needy beneficiaries. 

Written in 2014, the Home and Community Based Services regulation was first created to provide guidelines for a noninstitutionalized setting of care for older adults and disabled patients. It also required states to create a transition plan for implementation within three years but later extended the date to March 2022 for compliance. 

“Even well-intentioned policies from Washington often lack the flexibility needed to work for every state, community, setting or family,” said CMS Administrator Seema Verma in a statement. “The implementing guidance issued under the prior administration was simply too prescriptive and unfairly singled out certain settings, causing unnecessary anxiety for many beneficiaries, families and providers. We believe our revised guidance strikes the appropriate balance to protect individual choice while maintaining the integrity of home and community-based funding.”

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Some of the changes outlined in the letter include:

  • Better-defined criteria of settings containing HCBS beneficiaries.
  • More flexibility so that states can minimize additional review by CMS.
  • Removal of settings that would previously be identified as institutional.
  • Streamlined requirements for what states must submit for public comment on presumptively institutional settings.
  • Limited federal oversight for private homes where individuals received Medicaid. 

“NAMD is glad to see CMS issue updated heightened scrutiny guidance to clarify both when and how states should submit heightened scrutiny evidentiary packages for settings that isolate,” Jack Rollins, senior policy analyst at the National Association of Medicaid Directors, told FierceHealthcare. “This area has been a persistent challenge for states, and CMS providing clarity will support states’ ongoing compliance efforts."

Rollins notes that it is difficult to predict whether states will be able to implement these changes easily. However, he notes that the guidance provides deadlines: comply with HCBS rule by July 1, 2020, or submit a heightened scrutiny request for the setting by Oct. 1, 2020.

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“There may be challenges for states in meeting these deadlines, depending on where they are in the overall assessment of their current HCBS settings and the readiness of those settings to make changes and become compliant,” he said.