[Federal Register Volume 77, Number 88 (Monday, May 7, 2012)]
[Rules and Regulations]
[Pages 26827-26903]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-10294]



[[Page 26827]]

Vol. 77

Monday,

No. 88

May 7, 2012

Part II





Department of Health and Human Services





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Centers for Medicare & Medicaid Services





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42 CFR Part 441





Medicaid Program; Community First Choice Option; Final Rule

Federal Register / Vol. 77 , No. 88 / Monday, May 7, 2012 / Rules and 
Regulations

[[Page 26828]]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Part 441

[CMS-2337-F]
RIN 0938-AQ35


Medicaid Program; Community First Choice Option

AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.

ACTION: Final rule.

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SUMMARY: This final rule implements section 2401 of the Affordable Care 
Act, which establishes a new State option to provide home and 
community-based attendant services and supports. These services and 
supports are known as Community First Choice (CFC). While this final 
rule sets forth the requirements for implementation of CFC, we are not 
finalizing the section concerning the CFC setting.

DATES: These regulations are effective July 6, 2012.

FOR FURTHER INFORMATION CONTACT: Kenya Cantwell, (410) 786-1025.

SUPPLEMENTARY INFORMATION:

I. Executive Summary and Background

A. Executive Summary

1. Purpose
    This final rule implements section 2401 of the Affordable Care Act 
of 2010, as amended by the Health Care and Education Reconciliation Act 
of 2010, which adds section 1915(k) to the Social Security Act (the 
Act). The Community First Choice Option established a new State plan 
option to provide home and community-based attendant services and 
supports at a 6 percentage point increase in Federal medical assistance 
percentage (FMAP). While this final rule sets forth the requirements 
for implementation of CFC, we are not finalizing Sec.  441.530, 
``Setting,'' at this time.
2. Summary of the Major Provisions
     This final rule sets out our interpretation of the 
statutory requirements for eligibility under the Community First Choice 
(CFC) Option. Specifically, this final rule clarifies that under the 
statute, individuals should be determined to need an institutional 
level of care to be eligible for CFC services. This rule also provides 
States with the option to permanently waive the annual recertification 
requirement for individuals if it is determined that there is no 
reasonable expectation of improvement or significant change in the 
participant's condition because of the severity of a chronic condition 
or the degree of impairment of functional capacity.
     This rule specifies the services that must be made 
available under the CFC State plan option. States electing this option 
must make available home and community-based attendant services and 
supports to assist in accomplishing activities of daily living, 
instrumental activities of daily living, and health-related tasks 
through hands-on assistance, supervision, and/or cueing. Additionally, 
the following services may be provided at the State's option: 
Transition costs such as rent and utility deposits, first month's rent 
and utilities, purchasing bedding, basic kitchen supplies, and other 
necessities required for transition from an institution; and the 
provision of services that increase independence or substitute for 
human assistance to the extent that expenditures would have been made 
for the human assistance, such as non-medical transportation services 
or purchasing a microwave.
     States are required to use a person-centered service plan 
that is based on an assessment of functional need and allows for the 
provision of services to be self-directed under either an agency-
provider model, a self-directed model with service budget, or other 
service delivery model defined by the State and approved by the 
Secretary. States may offer more than one service delivery model.
     The final rule also implements the requirement that for 
the first full twelve month period in which a CFC State plan amendment 
is implemented, the State must maintain or exceed the level of 
expenditures for home and community-based attendant services provided 
under the State plan, waivers or demonstrations, for the preceding 12-
month period.
     States will receive an additional 6 percentage point in 
Federal Medical Assistance Percentage (FMAP) for the provision of CFC 
services and supports.
3. Summary of Costs and Benefits

------------------------------------------------------------------------
     Provision description         Total costs         Total benefits
------------------------------------------------------------------------
Provision of home and           The Federal and    This final rule
 community based attendant       State impacts      provides States with
 services and supports.          for FY 2012 are    additional
                                 estimated at       flexibility to
                                 $820 million and   finance home and
                                 $480 million,      community-based
                                 respectively.      services attendant
                                                    services and
                                                    supports. We
                                                    anticipate this
                                                    provision will
                                                    likely increase
                                                    State and local
                                                    accessibility to
                                                    services that
                                                    augment the quality
                                                    of life for
                                                    individuals through
                                                    a person-centered
                                                    plan of service and
                                                    various quality
                                                    assurances, all at a
                                                    potentially lower
                                                    per capita cost
                                                    relative to
                                                    institutional care
                                                    settings.
------------------------------------------------------------------------

B. Section 2401 of the Affordable Care Act

    The Patient Protection and Affordable Care Act of 2010 (Pub. L. 
111-148, enacted on March 23, 2010), as amended by the Health Care and 
Education Reconciliation Act of 2010 (Pub. L. 111-152, enacted March 
30, 2010) (collectively referred to as the Affordable Care Act) 
established a new State plan option to provide home and community-based 
attendant services and supports. Section 2401 of the Affordable Care 
Act, entitled ``Community First Choice (CFC) Option,'' adds a new 
section 1915(k) of the Social Security Act (the Act) that allows 
States, at their option, to provide home and community-based attendant 
services and supports under their State plan. This option, available 
October 1, 2011, allows States to receive a 6 percentage point increase 
in Federal matching payments for medical assistance expenditures 
related to this option.
    Under section 1915(k)(1) of the Act, States can provide home and 
community-based attendant services and supports for individuals who are 
eligible for medical assistance under the State plan whose income does 
not exceed 150 percent of the Federal Poverty Level (FPL) or, if 
greater, the income level applicable for an individual who has been 
determined to require an institutional level of care to be eligible for 
nursing facility services under the State plan and for whom there has 
been a determination that, but for the provision of such services, the 
individuals would require the level of care provided in a hospital, a 
nursing facility, an intermediate care facility for

[[Page 26829]]

the mentally retarded, or an institution for mental diseases, the cost 
of which could be reimbursed under the State plan. The individual must 
choose to receive such home and community-based attendant services and 
supports, and the State must meet certain requirements set forth in 
section 1915(k)(1) of the Act. Section 1915(k)(1)(A) of the Act 
requires States electing this option to make available home and 
community-based attendant services and supports to eligible 
individuals, under a person-centered service plan agreed to in writing 
by the individual, or his or her representative, that is based on a 
functional needs assessment. This assessment will determine if the 
individual requires assistance with activities of daily living (ADLs), 
instrumental activities of daily living (IADLs), or health-related 
tasks. The services and supports must be provided by a qualified 
provider in a home and community-based setting under an agency-provider 
model, or through other methods for the provision of consumer 
controlled services and supports as referenced in section 1915(k)(6)(C) 
of the Act. Section 1915(k)(1)(B) of the Act requires that States make 
available additional services and supports including the acquisition, 
maintenance, and enhancement of skills necessary for the individual to 
accomplish ADLs, IADLs, and health-related tasks, backup systems or 
mechanisms to ensure continuity of services and supports and voluntary 
training on how to select, manage, and dismiss attendants.
    Section 1915(k)(1)(C) of the Act prohibits States from providing 
services and supports excluded from section 1915(k) of the Act, 
including room and board costs for the individual; special education 
and related services provided under the Individuals with Disabilities 
Education Act (Pub. L. 101-476, enacted on October 30, 1990) (IDEA) and 
vocational rehabilitation services provided under the Rehabilitation 
Act of 1973 (Pub. L. 93-112, enacted on September 26, 1973); assistive 
technology devices and services other than backup systems or mechanisms 
to ensure continuity of services and supports, medical supplies and 
equipment, or home modifications. However, some, although not all, of 
these services can be covered by Medicaid under other authorities. 
Section 1915(k)(1)(D) of the Act sets forth services and supports 
permissible under section 1915(k) of the Act that States can provide, 
including expenditures for transition costs such as rent and utility 
deposits, first month's rent and utilities, bedding, basic kitchen 
supplies, and other necessities required for an individual to make the 
transition from a nursing facility, institution for mental diseases, or 
intermediate care facility for the mentally retarded to a community-
based home setting where the individual resides. States can also 
provide for expenditures relating to a need identified in an 
individual's person-centered plan of services that increase 
independence or substitute for human assistance, to the extent that 
expenditures would otherwise be made for the human assistance.
    Section 1915(k)(2) of the Act provides that States offering this 
option to eligible individuals during a fiscal year quarter occurring 
on or after October 1, 2011 will be eligible for a 6 percentage point 
increase in the Federal medical assistance percentage (FMAP) applicable 
to the State for amounts expended to provide medical assistance under 
section 1915(k) of the Act.
    Section 1915(k)(3) of the Act sets forth the requirements for a 
State plan amendment. States must develop and have in place a process 
to implement an amendment in collaboration with a Development and 
Implementation Council established by the State that includes a 
majority of members with disabilities, elderly individuals, and their 
representatives. States must also provide consumer controlled home and 
community-based attendant services and supports to individuals on a 
statewide basis, in a manner that provides such services and supports 
in the most integrated setting appropriate to the individual's needs, 
without regard to the individual's age, type or nature of disability, 
severity of disability, or the form of home and community-based 
attendant services and supports the individual requires to lead an 
independent life.
    In addition, for expenditures during the first full fiscal year of 
implementation, States must maintain or exceed the level of State 
expenditures for medical assistance attributable to the preceding 
fiscal year for medical assistance provided under sections 1905(a), 
1915, or 1115 of the Act, or otherwise provided to individuals with 
disabilities or elderly individuals. States must also establish and 
maintain a quality assurance system for community-based attendant 
services and supports that includes standards for agency-based and 
other delivery models for training, appeals for denials and 
reconsideration procedures of an individual plan, and other factors as 
determined by the Secretary. The quality assurance system must 
incorporate feedback from individuals and their representatives, 
disability organizations, providers, families of disabled or elderly 
individuals, and members of the community, and maximize consumer 
independence and control. The quality assurance system must also 
monitor the health and well-being of each individual who receives 
section 1915(k) services and supports, including a process for the 
mandatory reporting, investigation, and resolution of allegations of 
neglect, abuse, or exploitation in connection with the provision of 
such services and supports. The State must also provide information 
about the provisions of the quality assurance required to each 
individual receiving such services.
    States must collect and report information for the purposes of 
approving the State plan amendment, permitting Federal oversight, and 
conducting an evaluation, including data regarding how the State 
provides home and community-based attendant services and supports and 
other home and community-based services, the cost of such services and 
supports, and how the State provides individuals with disabilities who 
otherwise qualify for institutional care under the State plan or under 
a waiver the choice to receive home and community-based services in 
lieu of institutional care.
    Section 1915(k)(4) of the Act requires that States ensure, 
regardless of the models used to provide CFC attendant services and 
supports, such services and supports are to be provided in accordance 
with the requirements of the Fair Labor Standards Act of 1938 and 
applicable Federal and State laws regarding the withholding and payment 
of Federal and State income and payroll taxes; the provision of 
unemployment and workers compensation insurance; maintenance of general 
liability insurance; and occupational health and safety.
    Section 1915(k)(5) of the Act sets forth the requirements that 
States provide data to the Secretary for an evaluation and Report to 
Congress on the provision of CFC home and community-based attendant 
services and supports. States must provide information for each fiscal 
year for which CFC attendant services and supports are provided, on the 
number of individuals estimated to receive these services and supports 
during the fiscal year; the number of individuals that received such 
services and supports during the preceding fiscal year; the specific 
number of individuals served by type of disability, age, gender, 
education level, and employment status; and whether the specific 
individuals have been previously served under any other home and 
community-based

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services program under the State plan or under a waiver. Section 
1915(k)(5) also requires the Secretary to submit to Congress an interim 
report no later than December 31, 2013 and a final report no later than 
December 15, 2015. These reports must be available to the public.
    Finally, section 1915(k) (6) of the Act sets forth the definitions 
of specific terms as they relate to CFC.

C. Background of Home and Community-Based Attendant Services and 
Supports

    The CFC option expands States' and individual's Medicaid options 
for the provision of community-based long-term care services and 
supports. Consistent with the decision of the United States Supreme 
Court in Olmstead v. L.C., 527 U.S. 581 (1999), this option will 
support States in their efforts to develop or enhance a comprehensive 
system of long-term care services and supports in the community that 
provide beneficiary choice and direction in the most integrated 
setting. Since the mid-1970s, States have had the option to offer 
personal care services under their Medicaid State plans. The option was 
originally provided at the Secretary's discretion, had a medical 
orientation and could only be provided in an individual's place of 
residence. Personal care services were mainly offered to assist 
individuals in activities of daily living, and, if incidental to the 
delivery of such services, could include other forms of assistance (for 
example, housekeeping or chores). In the 1980s, some States sought to 
broaden the scope of personal care services to include community 
settings for the provision of services to enable individuals to 
participate in normal day-to-day activities.
    Through the Omnibus Budget Reconciliation Act of 1993 (Pub. L. 103-
66, enacted on August 10, 1993) (OBRA 93), the Congress formally 
included personal care as a separate and specific optional service 
under the Federal Medicaid statute and gave States explicit 
authorization, under a new section 1905(a)(24) of the Act, to provide 
such services outside the individual's residence in addition to 
providing personal care to eligible individuals within their homes. 
This provision was implemented by a final rule published in the 
September 11, 1997 Federal Register (62 FR 47896) that added a new 
section at Sec.  440.167 describing the option for States to provide a 
wide range of personal assistance both in an individual's residence and 
in the community. In 1999, we released additional guidance as an update 
to the State Medicaid Manual (SMM) to clarify that personal care 
services may include ADLs and IADLs that all qualified relatives, with 
the exception of ``legally responsible relatives'', could be paid to 
provide personal care services and that States were permitted to offer 
the option of consumer-directed personal care services.
    Additionally, the Omnibus Reconciliation Act of 1989 (Pub. L. 101-
239, enacted on December 19, 1989) (OBRA 89), revised the Early and 
Periodic Screening, Diagnosis and Treatment Benefit to include the 
requirement that all section 1905(a) services are mandatory for 
individuals under the age of 21 if determined to be medically necessary 
in accordance with section 1905(r) of the Act.
    Furthermore, before 1981, the Medicaid program provided limited 
coverage for long-term care services in non-institutional, community-
based settings. Medicaid's eligibility criteria and other factors made 
institutional care much more accessible than care in the community.
    Medicaid home and community-based services (HCBS) were established 
in 1981 as an alternative to care provided in Medicaid institutions, by 
permitting States to waive certain Medicaid requirements upon approval 
by the Secretary. Section 1915(c) of the Act was added to title XIX by 
the Omnibus Budget Reconciliation Act of 1981 (Pub. L. 97-35, enacted 
on August 13, 1981) (OBRA 81). Programs of HCBS under section 1915(c) 
of the Act are known as ``waiver programs'', or simply ``waivers'' due 
to the authority to waive certain Medicaid requirements.
    Since 1981, the section 1915(c) HCBS waiver program has afforded 
States considerable latitude in designing services to meet the needs of 
people who would otherwise require institutional care. In 2010, 
approximately 315 approved HCBS waivers under section 1915(c) of the 
Act served nearly 1 million elderly and disabled individuals in their 
homes or alternative residential community settings. States have used 
HCBS waiver programs to provide numerous services designed to foster 
independence; assist eligible individuals in integrating into their 
communities; and promote self-direction, personal choice, and control 
over services and providers. The Deficit Reduction Act of 2005 (Pub. L. 
109-171, enacted on February 8, 2006) (DRA) added section 1915(i) of 
the Act which affords some of the same flexibility and service coverage 
through the State plan without a waiver.
    The section 1915(k) benefit does not diminish the State's ability 
to provide any of the existing Medicaid home and community-based 
services. States opting to offer the CFC Option under section 1915(k) 
of the Act can continue to provide the full array of home and 
community-based services under section 1915(c) waivers, section 1115 
demonstration programs, mandatory State plan home health benefits, and 
the State plan personal care services benefit. CFC provides States the 
option to offer a broad service package that includes assistance with 
ADLs, IADLs, and health-related tasks, while also incorporating 
transition costs and supports that increase independence or substitute 
for human assistance.
    Additional important aspects of this background are the passage of 
the Americans with Disabilities Act of 1990 (Pub. L. 101-336, enacted 
July 26, 1990) (ADA), and the Olmstead v. L.C., U.S. Supreme Court 
decision. In particular, Title II of the ADA prohibits discrimination 
on the basis of disability by State and local governments and requires 
these entities to administer their services and programs in the most 
integrated setting appropriate to the needs of qualified individuals 
with disabilities. In applying the most integrated setting standard, 
the U.S. Supreme Court ruled in Olmstead that unnecessary 
institutionalization of individuals with disabilities constitutes 
discrimination under the ADA. Under Olmstead, States may not deny a 
qualified individual with a disability a community placement when: (1) 
Community placement is appropriate; (2) the community placement is not 
opposed by the individual with a disability; and (3) the community 
placement can be reasonably accommodated.
    Finally, the self-direction service delivery model is another 
important aspect to the background of this provision and a key 
component of the CFC option. Two national pilot projects demonstrated 
the success of self-directed care. During the 1990's, the Robert Wood 
Johnson Foundation funded these projects which evolved into Medicaid 
funded programs under section 1915(c) of the Act and the ``Cash and 
Counseling'' national section 1115 demonstration programs. Evaluations 
were conducted in both of these national projects. Results in both 
projects were similar--persons directing their personal care 
experienced fewer unnecessary institutional placements, experienced 
higher levels of satisfaction, had fewer unmet needs, experienced 
higher continuity of care because of less attendant care provider 
turnover, and maximized the efficient use of community services and

[[Page 26831]]

supports. The DRA also established section 1915(j) of the Act which 
provided a State plan option for States to utilize this self-direction 
service delivery model without needing the authority of a section 1115 
demonstration.
    This rule finalizes many of the provisions set forth in the 
February 25, 2011 proposed rule, modifies some such provisions and 
allows that one provision, Sec.  440.530 ``Setting'', will be subject 
to further comment.

II. Analysis of and Responses to Public Comments on the Proposed Rule

    We received a total of 141 timely items of correspondence from home 
care provider representatives and other professional associations, 
State Medicaid directors, unions, beneficiaries, and other individuals. 
We received hundreds of individual comments within these items of 
correspondence, which ranged from general support or opposition to the 
proposed rule, to specific questions and detailed comments and 
recommendations regarding the proposed changes. A summary of our 
proposals, the public comments and our responses are set forth below.

A. General

    Comment: Many commenters expressed support for the rule. Several 
commenters strongly believe that everything must be done to help keep 
individuals out of nursing homes and in the community. The commenters 
stated doing so will save taxpayer's money and increase the quality of 
life for individuals who receive services. The commenters believe 
individuals are valuable to communities and they deserve to have the 
``cheaper'' option of staying home. Another commenter indicated that 
CFC could provide needed assistance to children with special health 
care needs and their families who wish to remain in their communities 
where they can direct their own service plan. Another commenter 
indicated that personal care is more humanely provided and more cost 
effective in the home rather than in an institution. The commenter 
believes infrastructure cost of running an institution and the need to 
protect the administration detracts from patient care efforts, and 
believes patient care becomes secondary to administrative function. 
Another commenter requests the CFC rule be implemented so that all 
disabled persons, such as the commenter's 31-year old son who is 
partially paralyzed by a stroke, have a choice of living their own 
life. Another commenter stated community-based reimbursed services 
provide access for the growing group of aging baby boomers. The 
commenter believes that CFC will support individuals in the setting 
appropriate to the individual's need and allow them to lead a more 
independent lifestyle. The commenters urged CMS to implement the final 
rule. One commenter was pleased the rule recognized the need for 
flexibility to ``meet States where they are'' with regard to the 
provision of home and community-based services with an eye toward 
expanding opportunities for consumers.
    Response: We appreciate the commenters' perspectives.
    Comment: A few commenters expressed opposition to the proposed 
rule. One commenter requested limiting excessive rules that would 
burden the States financially or would be time-consuming to implement. 
Another commenter believes CFC violates the 10th amendment of the 
United States Constitution by requiring States to perform services that 
the Federal Government is prohibited from doing by the Constitution. 
The commenter believes the regulation should be withdrawn.
    Response: We disagree with the commenters' statement that the CFC 
program violates the 10th amendment of the United States Constitution. 
Section 1915(k) of the Act sets forth an option, not a mandate, for 
States to include such services in their Medicaid program.
    We do not believe the regulation places excessive requirements on 
States, rather it provides States with the necessary guidance to 
implement section 1915(k) of the Act successfully. We also believe the 
regulation provides participant protections to ensure individuals 
exercise maximum control of home and community-based attendant services 
and supports.
    Comment: One commenter expressed concern that section 1.B, 
Background of Home and Community-Based Attendant Services and Supports, 
omits the section 1930 Community Supported Living Arrangements program, 
which influenced the development of home and community-based services. 
The commenter believes this is an important cornerstone of the new 
program and should be included in the final rule.
    Response: We agree that the section 1930 Community Supported Living 
Arrangement program has influenced the development of home and 
community-based services. However, we do not believe that its specific 
influence on the CFC option warrants inclusion in the final rule.
    Comment: One commenter indicates that to implement CFC for the 
population eligible to receive home and community-based attendant 
services and supports, as well as to implement the array of services 
available to eligible individuals would be overly expansive. The 
commenter believes States would need additional staffing to assess the 
needs of the eligible CFC populations, develop and maintain the quality 
assurance systems, and report data. Another commenter expressed concern 
that the proposed rule creates some uncertainty about whether States 
can build upon existing State structures in delivering services under 
CFC.
    Response: We recognize that States that do not currently have the 
infrastructure necessary to support implementation of CFC may 
experience higher initial administrative burdens and costs when 
designing their CFC program. We believe the enhanced FMAP provided 
under CFC will lessen the burden on States, allowing them to serve the 
population eligible for CFC. Additionally, States may use existing 
infrastructure, such as a current advisory council to act as the 
Development and Implementation Council, as long as the statutory 
requirements for the structure, composition, and collaborative and 
consultative role of the council are met.
    Comment: One commenter wanted to know the impact CFC will have on 
the Early Periodic Screening Diagnosis and Treatment (EPSDT) benefit
    Response: The EPSDT mandate under section 1905(r)(5) of the Act 
requires that any medically necessary health care service listed at 
section 1905(a) of the Act be provided to a Medicaid beneficiary under 
the age of 21 even if the service is not available under the State's 
Medicaid plan to the rest of the Medicaid population. CFC services are 
provided under section 1915(k) of the Act, which is outside the scope 
of section 1905(a) of the Act and therefore are not required under the 
EPSDT program. We note that this does not preclude a State from 
providing CFC services to any individual who meets the criteria to 
receive CFC services, regardless of age, and from receiving the added 
Federal support associated with providing CFC services. Furthermore, in 
addition to meeting EPSDT requirements through the provision of the 
section 1905(a) services, a State may also meet a particular child's 
needs under EPSDT through services that are also available through the 
section 1915(k) benefit.
    Comment: One commenter expressed concern that the rule should 
include appeals for reductions in service based

[[Page 26832]]

on anything other than a documented change in need. The commenter 
indicated that his State allows requests for hearings, but stated that 
they are routinely denied. The commenter stated that the State's 
assurances with regard to due process are not reliable and recommended 
that there be a higher standard for the CFC option and other waivers 
with regard to appeals.
    Response: We acknowledge the importance of a beneficiary's ability 
to appeal service reductions. States are required to adhere to the 
requirements specified in 42 CFR 431 subpart E for the Medicaid program 
in general, and for CFC specifically. It is important to note, however, 
that CFC is a State plan option and not an HCBS waiver.
    Comment: One commenter explained that their State asserts they have 
no obligation to meet the client's needs in the community--only that 
the services authorized be indexed to actual needs. The commenter also 
stated that the risk of re-institutionalization is controlled by 
closing institutions, resulting in clients being placed into community 
placements without the same level of support provided in an 
institutional setting. The commenter believes that CMS ``turns a blind 
eye'' to these issues and that all waivers should respect the clients' 
rights to have their needs met in the community. Another commenter 
expressed concern that their State is intentionally limiting services 
and that the State has declared that they have no obligation to, or 
intention of, meeting the needs of vulnerable adults in the community. 
The commenter is concerned the choice guaranteed in the Olmstead 
decision is not upheld, and wonders why the Federal government goes 
through these pro-forma rulemaking processes when there is no intent to 
follow-up or enforce the ``reassuring words.''
    Response: We want to clarify that the CFC is a State plan option, 
not a waiver. We respect the commenter's opinions, but do not agree 
with the commenter with regard to the Federal government not enforcing 
regulations or ignoring these important issues noted above. We also 
believe that the rulemaking process is a meaningful process that allows 
the public to have a voice in how laws passed by the Congress are 
implemented by CMS. We echo throughout the regulation that in 
implementing CFC, States must ensure that individuals are served in the 
most integrated settings appropriate to their needs. We have also 
worked closely with Medicaid beneficiaries, as well as States, over the 
years to assist in determining how the Medicaid program can support 
them in meeting their Olmstead obligations. This regulation will 
establish the parameters States must follow in implementing CFC. 
Additionally, the Data collection requirements described at Sec.  
441.580, and the Quality assurance system requirements described at 
Sec.  441.585, require States to provide CMS with information regarding 
the provision of CFC services. We encourage all stakeholders to 
collaborate with States and CMS to ensure these parameters are met.
    Comment: One commenter stated that to be consistent with Olmstead, 
personal choice is required to participate in the CFC option, and the 
proposed rule should be amended to expressly indicate this right and 
take care not to limit expressions of beneficiary choice to community 
options.
    Response: We agree that personal choice is an important part of CFC 
and have taken steps throughout the regulation to illustrate its 
importance. Based on feedback received through the comment process, we 
have decided to amend language in the ``assessment of need'' and 
``person-centered service plan'' sections, as described below, to 
strengthen this principle.
    Comment: Another commenter stated that the current focus of their 
State's Home and Community-Based Services (HCBS) plans is on lowering 
costs, not meeting all the needs of individuals. The commenter is 
concerned that States have too much power and the CFC rule does not 
correct the imbalance between saving taxpayer money while still serving 
the needs of vulnerable adults.
    Response: The Medicaid program is a State/Federal partnership. 
States have the flexibility to design and administer their Medicaid 
programs as long as they meet the Federal requirements set forth in the 
regulations. In addition, States have the choice of providing an array 
of optional services. The purpose of CFC is to afford States another 
option to provide home and community-based services as an alternative 
to institutional placement. This benefit is not like a waiver program 
in that it is not required to be cost neutral in terms of community 
versus nursing facility costs. While this program should not be viewed 
individually as the key to ensuring community access, it is an 
important tool for States to consider as they strive to meet their 
obligations under Olmstead.
    Comment: We received many comments asking if CFC can be delivered 
through managed care under a section 1915(b) waiver authority, or a 
section 1915(b)/(c) waiver. One commenter expressed concern that the 
proposed rule does not reference the ability for States to deliver this 
rule's services through Medicaid health plans under a section 1915(b) 
waiver. The commenter believes that Medicaid health plans have 
demonstrated their ability to provide coordination across a range of 
services essential to facilitate the choice of community setting for 
individuals with disability. The commenter recommended CMS confirm in 
the preamble that States have the option of implementing the CFC option 
through Medicaid managed care programs. Another commenter requested 
States not be subject to additional limitations or restrictions if they 
elect to have a managed care organization administer their program.
    Response: We are willing to consider the implementation of the CFC 
option through Medicaid managed care programs with a State interested 
in doing so; however, the State would need to ensure that the delivery 
system implemented through the (b) waiver would not impede the 
provision of services as specified in section 1915(k) of the Act. 
Therefore, we are not revising the regulation text.
    Comment: One commenter requested clarification whether the 
additional 6 percentage point increase in Federal medical assistance 
percentage (FMAP) is for expenditures related to both direct services 
and administration.
    Response: The 6 percentage point increase in FMAP is related to 
direct services only and does not apply to administrative costs.
    Comment: One commenter expressed concern that regulatory 
requirements for CFC may be duplicative of, or in conflict with PACE 
regulations applicable to PACE organizations. The commenter requested 
clarification on the relationship of the PACE program and CFC for PACE 
participants who also meet the eligibility criteria for CFC. 
Specifically, the commenter questioned if home and community-based 
attendant services may be provided in a manner consistent with the PACE 
benefit under section 1934 of the Act. The commenter also questioned if 
PACE organizations may provide services under CFC under the agency-
provider model or under another model established by a State.
    Response: Section 1915(k) of the Act does not preclude PACE 
organizations, or any entity, from providing CFC services as a separate 
line of business, as long as provider qualifications established by the 
State are met. However, CFC is a separate and distinct program, with 
its own statutory and regulatory requirements, and may not be provided 
under the PACE authority.
    Comment: One commenter requested CMS include a direct reference to 
a

[[Page 26833]]

State's obligation, in establishing processes for public notice and 
input, to comply with section 5006(e) of the American Recovery and 
Reinvestment Act of 2009 (Pub. L. 111-5, enacted on February 17, 2009) 
(ARRA) prior to submission of a State plan amendment or other action 
under section 2401 of the Affordable Care Act that would have a direct 
effect on Indians or Indian health providers or urban Indian 
organizations.
    Response: The consultation requirements of section 5006(e) of ARRA 
require solicitation of advice prior to submission of any State plan 
amendment, waiver request, or proposal for a demonstration project that 
is likely to have a direct effect on Indians, Indian Health Programs or 
Urban Indian Organizations, in any State in which one or more Indian 
Health Programs or Urban Indian Organizations furnishes health care 
services. These requirements apply to but are not unique to CFC. 
Therefore, we do not believe it is appropriate to include these 
requirements in this regulation specifically. CMS reviews State plan 
amendments, waiver requests, and demonstration proposals for compliance 
with the ARRA 5006(e) provisions.
    Comment: One commenter requests Medicare expand options to allow 
individuals to stay at home.
    Response: This rule implements section 2401 of the Affordable care 
Act, which is limited to the Medicaid program.
    Comment: One commenter recommended CMS incorporate provisions 
within the CFC regulation to enable States to implement data systems to 
monitor the direct-care workforce.
    Response: We believe the implementation of data systems to monitor 
the direct-care workforce would be an acceptable component of a State's 
Quality Assurance System. However, we do not believe there is a need to 
reference this specifically.
    Comment: One commenter requests the term ``mentally retarded'' be 
replaced throughout the final document in its entirety with a term such 
as ``developmentally disabled'', ``individual with an intellectual 
disability'' or other more appropriate language.
    Response: We appreciate the commenter's concern and note that the 
rule does not include the term ``mentally retarded'', but rather, 
includes the statutory term ``Intermediate Care Facility for the 
Mentally Retarded (ICF/MR).'' While CMS supports using the term 
``individuals with intellectual disabilities,'' it would be beyond the 
scope of this regulation to change the statutory name of ICFs/MR. Since 
we are only using this term to refer to this specific setting, which 
has not been renamed in law, we do not believe we can make this change. 
However, in the October 24, 2011 Federal Register, we proposed in the 
Regulatory Provisions to Promote Program Efficiency, Transparency, and 
Burden Reduction proposed rule to replace the term ``mentally 
retarded'' with ``intellectually disabled'' throughout our regulations.

B. Basis and Scope (Sec.  441.500)

    We proposed to implement section 1915(k) of the Act, known as the 
CFC Option, to provide home and community-based attendant services and 
supports through the Medicaid State plan. We proposed the scope of the 
benefit include the provision of home and community-based attendant 
services and supports to eligible individuals, as needed, to assist in 
accomplishing ADLs, IADLs, and health-related tasks through hands-on 
assistance, supervision, or cueing.
    Comment: One commenter indicated that CFC should be a mandatory 
benefit.
    Response: Section 1915(k) of the Act amends the Medicaid statute to 
add CFC as an optional State Plan benefit, not a mandatory benefit. It 
is beyond the scope of a regulation to expand CFC to a mandatory 
benefit.
    Comment: Many commenters stated that this section of the regulation 
should acknowledge that CFC is intended to make available home and 
community-based attendant services and supports to people with 
disabilities of all ages as an alternative to institutional placement. 
Another commenter stated the same, but also included individuals with 
serious mental illness.
    Response: We agree with the commenters that the scope of CFC is to 
provide home and community-based services and supports as an 
alternative to institutional placement. Furthermore, we received 
comments supporting Congressional intent that all individuals receiving 
CFC services must meet an institutional level of care, consistent with 
the view that CFC is to provide services and supports as an alternative 
to institutional placement. We discuss this issue in further detail in 
the response to comments on Eligibility, Sec.  441.510. We have revised 
the eligibility section to clarify that under the statute all 
individuals receiving CFC services must meet an institutional level of 
care; however, we do not believe it is necessary to revise the basis 
and scope section explicitly.
    Comment: One commenter wanted to know if there is State flexibility 
to focus on a single modality (hands-on or supervision or cueing) or 
must all three modalities be covered.
    Response: We believe the statutory language requires that all three 
modalities must be available to individuals.
    Comment: One commenter stated that the regulation should allow for 
different ``benefit'' packages for people with different needs; for 
example, populations such as children versus adults, young adults 
versus older adults.
    Response: Section 1915(k)(3)(B) of the Act requires that services 
must be provided without regard to the individual's age, type or nature 
of disability, severity of disability, or the form of home and 
community-based attendant services and supports the individual requires 
to lead an independent life. Therefore, States may not differentiate 
the benefit package; however, services must be provided to individuals 
based on their needs.
    Comment: A few commenters expressed concern with a State's ability 
to limit the amount, duration, and scope of CFC. One commenter believes 
States make arbitrary and capricious reductions in services due only to 
budget constraints. These reductions result in an individual's reliance 
on ``informal care contracts'' paid by the individual's small income to 
fill the gap of needed services. Another commenter expressed concern 
that States who take advantage of this new option may impose 
unnecessary restrictions on families (such as limiting in-home nursing 
supports to children who are on ventilators).
    Response: CFC is a State plan optional service and States may set 
limits on the amount, duration and scope of services, as long as the 
amount, duration and scope are sufficient to reasonably achieve the 
purpose of the service. In addition, these limits must be applied 
without regard to the individual's age, type or nature of disability, 
severity of disability, or the form of home and community-based 
attendant services and supports that the individual requires to lead an 
independent life. We will be reviewing all State proposals to implement 
CFC under the State plan. Our review will include a review of any 
proposed limitations.
    Comment: One commenter requested clarification of what is meant by 
``severity of disability'' and asked if this definition would preclude 
limiting the CFC to the ``severely impaired'' population. In addition, 
this commenter raised the concern that if the definition does preclude 
limiting CFC population, States would lose the ability to ``effectively 
utilize CFC to serve unique populations.''

[[Page 26834]]

    Response: As stated above, section 1915(k)(3)(B) of the Act 
indicates that the services must be provided on a statewide basis 
without regard to the individual's age, type or nature of disability, 
severity of disability, or the form of home and community-based 
attendant services and supports that the individual requires to lead an 
independent life as specified in Sec.  441.515. Based on this 
requirement, the CFC population cannot be limited based on type or 
severity of disability, as long as the individual meets the eligibility 
requirement set forth in Sec.  441.510. States cannot refuse access to 
CFC, or the ability to self-direct CFC services and supports, because 
of the severity of an individual's needs.
    After consideration of the public comments, this section is being 
finalized without revision.

C. Definitions (Sec.  441.505)

    We proposed several definitions specific to CFC.
    Comment: Many commenters applauded CMS for prefacing the list of 
ADLs with ``including, but not limited to.'' The commenters believe 
this language recognizes that individuals may have additional needs for 
support.
    Response: The intent of CFC is to assist individuals with receiving 
services necessary to have a lifestyle that is integrated into their 
community. Therefore, we do not believe it is appropriate to specify a 
prescriptive list that may not address each person's individualized 
needs.
    Comment: One commenter wanted to know if States are allowed to 
define ADLs more expansively by adding activities since the definition 
of ADLs includes the phrase ``but not limited to.''
    Response: Through the State Plan Amendment (SPA) process, States 
have the flexibility to propose additional factors to be included as 
components of ADLs.
    Comment: A few commenters suggested removing the term ``self-
directed'' from the definition of ``agency-provider model.'' The 
commenters believe the use of this term with the agency-provider model 
implies that services will be restricted to individuals who can fully 
manage services and supports, and will not allow individuals who are 
unable to fully manage them, or who do not wish to do so, from 
receiving services under the agency-provider model.
    Response: We believe the commenter is applying a different 
definition of ``self-direction'' than what is specified within this 
rule. Section 1915(k)(6)(B) of the Act used the term ``consumer 
controlled'' to mean a method of selecting and providing services and 
supports that allow the individual, or where appropriate, the 
individual's representative, maximum control of the home and community-
based attendant services and supports, regardless of who acts as the 
employer of record. In the preamble of the proposed regulation, we 
elected to use the term self-directed rather than consumer controlled 
to be consistent with terminology in other Medicaid provisions. We 
interpret this to mean that all CFC services are self-directed and it 
is up to the individual to determine the level of self-direction they 
want to have. Therefore we are not adopting the commenter's 
suggestions.
    Comment: Several commenters requested more clarification around the 
``agency-provider model.'' A few commenters wanted to know if the 
agency-provider model is the same as what is sometimes referred to as a 
``co-employment'' model. One commenter disagreed with the proposed 
definition stating that an agency-provider model does not mean that an 
entity contracts for the provision of services and supports. The 
commenter states the agency-provider model has to do with who the 
employer is. The commenter also states that under an agency-provider 
model, the individual can still select, train, manage, and dismiss an 
attendant care provider. When the attendant care provider is dismissed, 
the attendant care provider is still employed by the agency and can be 
selected by someone else.
    Response: The definition in the rule is from section 
1915(k)(6)(C)(i) of the Act. In the preamble of the Service Model 
section of the proposed rule, we construed the ``agency-provider 
model'' to mean ``traditional agency model'' and an ``agency with 
choice'' model. Under the traditional agency model, the individual 
retains hiring and firing authority of personal care attendants, with 
regard to the receipt of services from a specific personal care 
attendant. In other words, the employment relationship between the 
personal care attendant and the agency does not change. The agency with 
choice model utilizes a co-employment relationship between the 
individual and an agency. We acknowledge that not all agency-provider 
models utilize a contractual relationship between the agency-provider 
entity and the State Medicaid agency for the provision of services. 
Rather, it is more common for a provider agreement to be used. 
Therefore, we are modifying the agency-provider definition to better 
reflect the various arrangements through which the provision of 
personal attendant services may occur. We will also modify the language 
at Sec.  441.545(i) to reflect this change. Additionally, we 
acknowledge the confusion caused by our use of the terms ``hire'' and 
``fire.'' We will replace such terms with ``select'' and ``dismiss'' 
throughout the regulation, as appropriate. We appreciate the 
commenter's description of an agency-provider model and believe it is 
one example of an agency-provider model that falls within the 
definition in the rule. We believe the definition in the rule is broad 
enough to encompass the various agency-provider types that exist.
    Comment: We received a few comments requesting that we define the 
agency-provider model in a way that clearly includes States that 
provide long term care services and supports directly through public 
authority entities instead of private contractual arrangement.
    Response: It is our understanding that the structure of the long-
term care services and supports provided through public authority 
entities varies among States. It is possible that one State's public 
authority entities could meet the definition of an agency-provider type 
while another State's public authority entities meet the definition of 
``other model.'' For this reason, we are requesting States to provide a 
description of such entities during the SPA process.
    Comment: One commenter suggests we add ``as defined by the State 
and approved by the Secretary'' into the definition of ``backup systems 
or supports'' to ensure consistency with other home and community-based 
service programs.
    Response: We do not agree the suggested language is necessary. All 
State plan amendments will require adherence to this regulation's 
service definitions and will be approved by CMS.
    Comment: Some commenters suggested medication management be 
included to the definition of ``backup systems.'' Other commenters 
requested the definition be revised to ensure coverage of a broad 
variety of health support technologies, such as telehealth, independent 
living technologies, and remote patient monitoring. The commenter 
advised that currently 44 States reimburse for Personal Emergency 
Response Systems (PERS), 16 States reimburse for medication management 
technology, 1 State reimburses for home telecare/remote monitoring, and 
7 States reimburse for home telehealth/telemonitoring under sections 
1905(a), 1915, or section 1115 of the Act. The commenter states that it 
is important that all these technologies that ensure continuity of 
services and

[[Page 26835]]

supports are also available under CFC. One commenter requested that 
PERS, medication management technology, telecare/remote monitoring and 
telehealth/telemonitoring should be included in the definition of 
``backup systems and supports.''
    Response: Section 1915(k) of the Act indicates the purpose of 
backup systems or mechanisms is to ensure continuity of services and 
supports. We do not believe medication management complies with the 
intent of backup systems and supports; however, it could be a component 
of personal attendant services, or another Medicaid service. We agree 
with the commenters that telemedicine could be a useful method of 
providing backup systems or supports. We are available to discuss a 
State's interest in using such technology for this purpose, but do not 
believe the rule should be revised to specifically indicate this. 
Therefore, we are not revising the definition of backup systems to 
include explicit reference to medication management and telemedicine 
technologies.
    Comment: We received many comments requesting that we expand the 
definition of ``backup systems and supports'' to include other 
approaches, such as written backup plans, action plans such as calling 
emergency agencies or personal emergency contacts, contacting other 
systems that support individuals in identifying backup attendant care 
providers when regularly scheduled attendants are unavailable, or other 
necessary planning to deal with a variety of possible situations which 
require additional services or supports. The commenters also added that 
backup systems should apply to all service models, stating that 
although backup systems are most often considered in the context of 
self-directed services they also apply to services and supports 
delivered through an agency-provider model.
    Response: We agree with the commenters that backup systems and 
supports may include approaches in addition to electronic devices. This 
belief is supported by the inclusion in the definition described in the 
proposed rule of allowing people to be included as backup supports. 
Additionally, we agree that each individual, regardless of service 
delivery model, should have a backup plan to address how emergencies 
and unplanned events affecting the continuity of services will be 
handled. This belief is supported in the requirement of backup 
strategies as a measure of risk mitigation included in the person-
centered service plan, which is required for all CFC participants 
regardless of service delivery model. We are modifying the requirements 
of the person-centered service plan to remove the ``as needed'' 
language, to indicate that all individuals should have an 
individualized backup plan.
    Comment: One commenter noted that the rule requires backup systems 
be made available but excludes assistive technology devices and 
assistive technology services.
    Response: Section 1915(k)(1)(C)(iii) of the Act indicates that 
assistive technology devices and assistive technology services are 
excluded, other than those under section 1915(k)(1)(B)(ii) of the Act. 
This authorizes the coverage of such devices and services when used as 
part of a backup system or mechanism to ensure continuity of services 
and supports.
    Comment: One commenter asked that CMS clarify in both the preamble 
and regulatory text, whether cell phones, hand-held communication 
devices such as smartphones, and computers that allow participants to 
communicate with providers of home and community-based attendant 
services would be allowable expenditures. Another commenter recommended 
the definition include language explicitly stating that smartphones and 
more generally, any useful emerging applications or technologies which 
will become available, are allowable.
    Response: We do not believe it is necessary to mention specific 
types of technology. To allow for the inclusion of future developments, 
we will replace the term ``pager'' with ``an array of available 
technologies.'' We believe the broad definition will support the 
inclusion of technological advances as they are developed.
    Comment: One commenter requested clarification regarding the 
circumstances in which it would be appropriate for a State to reimburse 
expenditures for CFC services furnished by a person who is an 
identified backup support. The commenter also requested that CMS 
provide guidance on what back up support services a person can provide.
    Response: The State may reimburse for any CFC service identified on 
the approved person-centered service plan, including those provided by 
a backup support person. However, the backup support person would need 
to be recognized by the State as an appropriate provider of CFC 
services and supports, for the State to reimburse those expenditures.
    Comment: One commenter requested clarification regarding how the 
definition of ``health-related tasks'' as tasks that can be delegated 
or assigned by licensed professionals might interact with a State's 
statutory exemption from the Nurse Practice Act delegation requirements 
for health maintenance activities under a self-directed model. 
Specifically, the commenter questioned if the State is required to 
conform to the delegation expectation as defined. Another commenter 
suggested the definition for ``health-related tasks'' should include 
tasks that are exempted from State law and/or licensure requirements.
    Response: The definition of ``health-related tasks'' specifies that 
tasks delegated or assigned by licensed professionals may be provided 
under CFC as long as the task being delegated is done in accordance 
with the State law governing the licensed professional delegating the 
task. Recognizing the variance among State laws governing the specific 
tasks licensed health-care professionals may delegate, we do not 
believe we should impose requirements that could cause a licensed 
professional to be out of compliance with the State law in which they 
provide services. We do acknowledge that this State variance will lead 
to a varied scope of activities meeting the definition of ``health-
related tasks.''
    Comment: One commenter questioned if a State can offer more than 
one self-directed option under different authorities of section 1915 of 
the Act where an item of specific difference is the delegation 
requirement.
    Response: In addition to the section 1915(k) authority, self-
directed services may be provided under other section 1915 authorities 
such as the section 1915(c) HCBS waiver authority, section 1915(j) 
Self-directed Personal Assistance Services Program State Plan Option, 
and section 1915(i) HCBS Plan Option. Each of these authorities has its 
own regulatory requirements that must be met, and each may be operated 
simultaneously with CFC as part of a State's Medicaid program. However, 
the 6 percent additional FMAP only pertains to services authorized 
under CFC.
    Comment: One commenter requested clarification as to whether the 
definition of ``individual's representative'' would allow a State to 
select a self-direction model that limits direction by representatives, 
for example, to parents of minor children.
    Response: Section 1915(k)(1)(A)(iv)(II) of the Act requires that 
services are controlled, to the maximum extent possible, by the 
individual or where appropriate, the individual's representative. It is 
an expectation that this control exists regardless of whether the 
individual is personally able and has chosen to make his or her own

[[Page 26836]]

decisions and direct his or her own services and supports, is 
represented by someone such as a guardian or parent who is authorized 
to make decisions for him or her under the laws of the State, or has 
selected or appointed a representative. This is true regardless of the 
service delivery model. The State may not place a limit on this 
statutory requirement.
    Comment: Many commenters suggested the definition of ``individual's 
representative'' explicitly include spouse and partner. The commenters 
also suggested the definition specify that an authorized individual is 
someone who has been designated by the participant or family to 
represent the participant to the extent the participant wishes. One 
commenter requested the definition include paid and unpaid individuals 
chosen by the individual or family. One commenter requested the 
language be clear that the designation made by the individual does not 
require a formal process (such as guardianship). One commenter 
requested that we revise the definition of ``individual's 
representative'' to include a broad definition of ``family'' that 
recognizes a same-sex partner or a child of a partner as members of the 
individual's family. The commenter also requested the rule use the 
Office of Personnel Management's definition of ``family member.''
    Response: In defining the term ``individual's representative'' we 
are aware that States have a variety of laws regarding selection, 
appointment, designation, or recognition of surrogate decision-makers 
with respect to personal, financial, and health care matters. We are 
not requiring a formal process for the appointment of an authorized 
representative for the purposes of CFC, but are aware that States may 
have procedures and requirements that may apply. We do not agree with 
the suggestions to amend the definition further to list specific 
relationships an individual may have, as we believe this could be 
inconsistent with the laws of the State, or overly prescriptive on an 
issue that is deeply personal and highly individualized. We believe the 
definition we proposed is broad enough to allow individuals the 
opportunity to exercise maximum choice with respect to the individual 
who will act as their representative. In some instances, the 
individual's representative under State law would have the authority to 
designate another individual as the representative for the purpose of 
participating in the planning and direction of services and supports 
under CFC. We expect the State to recognize the representative chosen 
by the individual if that choice is not inconsistent with State laws 
unless the State is aware of and can document through evidence that the 
representative is not acting in the best interest of the individual or 
is unable to perform the required functions. To reduce redundancy 
throughout the regulatory language, we are adding a definition for the 
term ``individual'' to mean the eligible individual and, if applicable, 
the individual's representative.
    We are not requiring in this rule that an authorized representative 
be chosen using a formal process, such as a court-appointed guardian, 
or the execution of a Power of Attorney. The authorized representative 
may be any person an individual chooses to assist him or her in making 
decisions regarding his or her care unless that choice is prohibited by 
State law. We also note that Sec.  435.908 provides that the single 
State Medicaid agency must allow an individual of the applicant's 
choice to accompany, assist and represent the application in the 
Medicaid eligibility application or renewal process. The individual 
assisting in the Medicaid application or renewal process need not be 
the same individual chosen in connection with the provision of services 
under section 1915(k) of the Act.
    Comment: Many commenters requested the rule specify that the 
authorization of an individual's representative should be in writing or 
in some other verifiable manner. The commenters expressed concern that 
someone may say they are the authorized representative when they are 
not. The commenters believe a written authorization is necessary to 
assure a purposeful and clear authorization, as well as to eliminate 
confusion if several individuals state that they represent a person 
with a disability.
    Response: We agree with the commenters that a written authorization 
is generally an appropriate safeguard to ensure individuals have an 
active role in electing a representative of their choice. Accordingly, 
we have revised the definition of individual representative as follows: 
``a parent, family member, guardian, advocate, or other authorized 
representative of the individual with written authorization, when 
feasible, by the individual to serve as a representative.'' We note 
that a legal guardian would not need to obtain written authorization by 
the individual to serve as a representative. Likewise, it is not 
practical to require a minor child to provide written authorization for 
a parent to serve as a representative. States must have methods in 
place to ensure the individual was maximally involved in the choice of 
his or her representative, particularly in instances in which the 
individual is unable to provide written authorization.
    Comment: One commenter questioned if an individual's representative 
assisting the individual to self-direct and manage their services can 
be paid as part of the service plan.
    Response: Individuals acting as a representative are not paid to do 
so. Individuals acting as a representative also should not be a paid 
caregiver of an individual receiving CFC services and supports. This 
arrangement was prohibited in the section 1915(j) regulation, to avoid 
a conflict of interest. We are modifying the definition of 
``Individual's representative'' to continue this prohibition.
    Comment: One commenter indicated that the proposed language 
broadens the definition of IADLS from the definition in the SMM. The 
commenter recommends the rule use the SMM definition, and added that if 
we do not align the definition with the SMM, we clarify what is meant 
by ``traveling around and participating in the community.''
    Response: We defined IADLs from the language used in section 
1915(k)(6)(F) of the Act. We believe ``traveling around and 
participating in the community'' alludes to the premise that CFC 
services and supports should facilitate an individual's desire to be 
fully integrated into their community and not limit the provision of 
services to an individual's residence.
    Comment: One commenter suggested the definition for IADLs include 
activities such as work life, parenting and basic home maintenance.
    Response: We appreciate the commenter's suggestion, however, since 
the IADL definition includes the language, ``but is not limited to'' 
which allows for the inclusion of additional activities determined 
appropriate for the individual, we do not agree that a change to the 
definition is needed.
    Comment: One commenter stated that the definition of IADLs includes 
the phrase ``but not limited to'' and asked if States be allowed to 
define these terms more expansively by adding activities to the 
definitions.
    Response: Through the SPA process, States have the flexibility to 
propose additional services to be included as components of IADLs.
    Comment: One commenter requested confirmation that since the 
definition of IADLs include managing finances, the financial management 
services defined at Sec.  441.545(b)(1) can be included as an IADL. The 
commenter also adds that if these activities are permissible IADLs, 
then it is a required service under

[[Page 26837]]

Sec.  441.520(a)(1) and (2), meaning that States must provide them.
    Response: Managing finances as an IADL activity pertains to 
assisting an individual with the management of personal finances. We 
believe such assistance is beyond the scope of the financial management 
activities defined at Sec.  441.545(b)(1) which is for the exclusive 
purpose of assisting an individual to ensure CFC service budget 
compliance with regulatory requirements, and is only for those 
individuals in a ``self-directed model with service budget'' delivery 
system.
    Comment: One commenter stated the definition for ``other models'' 
is not clear. The commenter asked for clarification as to whether 
States whose self-direction model recognizes the consumer as the 
employer, with the authority to hire and terminate employees, and makes 
available consumer and attendant care provider training opportunities, 
would meet the definition of ``other models.''
    Response: Section 1915(k)(6)(C)(ii) of the Act defines other models 
as methods other than an agency-provider model, for the provision of 
consumer controlled services and supports. Such models may include the 
provision of vouchers, direct cash payments, or use of a fiscal agent 
to assist in obtaining services. Under the ``Service Models'' section 
of the preamble, we interpreted ``other models'' to mean ``self-
directed model with service budget.'' We further described self-
directed model with service budget in Sec.  441.545(b)(1), (b)(2) and 
(b)(3). Based upon the commenter's information, it is difficult for us 
to determine if the model described would meet an agency-provider model 
or the self-directed model with service budget. We recognize that 
States utilize various models to provide individuals with different 
levels of self-direction to receive personal attendant services. It is 
possible for States to use existing models under either category, as 
long as the models meet the requirements of Sec.  441.545.
    To eliminate any confusion, we are adding a definition of ``Self-
directed model with service budget'' to mean ``methods of providing 
self-directed services and supports using an individualized service 
budget. Such models may include the provision of vouchers, direct cash 
payments and/or the use of a fiscal agent to assist in obtaining 
services.''
    To permit States to propose additional service delivery models not 
envisioned in this regulation, we will amend the definition of ``other 
models'' to mean ``methods other than an agency-provider model or the 
self-directed model with service budget, for the provision of self-
directed services and supports, as approved by CMS.'' We will work with 
States through the SPA review process to review proposed models.
    Comment: One commenter requested the regulation provide a 
definition for the term ``vouchers.''
    Response: For the purpose of CFC, vouchers are given a specific 
monetary value to be used for a specific good or service. They are used 
in various forms, such as tokens, or tickets. We believe the use of 
vouchers is common among State programs and the form varies greatly. We 
believe the term ``voucher'' should be defined by the State if they 
elect to use this structure.
    Comment: Several commenters shared their support of the ``self-
directed'' definition included in the rule. One commenter recommended 
the definition of ``self-directed'' should specifically say that the 
individual or representative has control to hire, train, supervise, 
schedule, determine duties, and fire the attendant care provider.
    Response: The definition reflects the language at section 
1915(k)(6)(B) of the Act. However, we agree with the commenter the 
definition should include the specific tasks an individual should have 
authority to do when self-directing CFC services. Therefore, we have 
revised the definition to say: ``Self-directed means a consumer 
controlled method of selecting and providing services and supports that 
allow the individual maximum control of the home and community-based 
attendant services supports, with the individual acting as the employer 
of record with necessary supports to perform that function, or the 
individual having a significant and meaningful role in the management 
of a provider of service when the agency-provider model is utilized. 
Individuals exercise as much control as desired to select, train, 
supervise, schedule, determine duties, and dismiss the attendant care 
provider.''
    Upon consideration of the public comments received, we are 
finalizing Sec.  441.505 with revision to the definition of 
``individual'' to incorporate the individual's representative as 
applicable, to add the definition of ``Self-directed model with service 
budget'' and to modify the definitions of ``agency-provider model'', 
``backup systems and supports'', ``individual's representative'', 
``other models'' and ``self-directed.''

D. Eligibility (Sec.  441.510)

    Section 1915(k)(1) of the Act requires that to receive services 
under CFC, individuals must be eligible for Medicaid under an 
eligibility group covered by the State plan. This section does not 
create a new eligibility group but rather a new benefit option. 
Individuals who are not eligible for Medicaid under a group covered 
under the State Medicaid plan are not eligible for the CFC, even if 
they otherwise meet the requirements for the option. The proposed rule 
interpreted the statute as providing that individuals eligible under 
the State Medicaid plan whose income does not exceed 150 percent of the 
FPL are eligible for CFC without requiring a determination of 
institutional level of care. In determining whether the 150 percent of 
the FPL requirement is met, the regular rules for determining income 
eligibility for the individual's eligibility group under the State plan 
apply, including any income disregards used by the State for that group 
under section 1902(r)(2) of the Act. We proposed that individuals 
eligible under the State Medicaid plan whose income is greater than 150 
percent of the FPL are eligible for CFC if it has been determined such 
individuals need the level of care required under the State Medicaid 
plan for coverage of institutional services. Specifically, we proposed 
that States must determine that, but for the provision of the home and 
community-based attendant services and supports, the individual would 
require the level of care provided in a hospital, a nursing facility, 
intermediate care facility for the mentally retarded or an institution 
for mental diseases, the cost of which would be reimbursed under the 
State plan. Additionally, we proposed that individuals who are eligible 
for Medicaid under the special home and community-based waiver 
eligibility group defined at section 1902(a)(10)(A)(ii)(VI) of the Act 
could be eligible to receive CFC services. We stated that these 
individuals would have to receive at least one section 1915(c) home and 
community-based waiver service per month. As we interpreted the statute 
in the proposed rule, the need for a level of care determination would 
be directly related to an individual's income level in section 
1915(k)(1) of the Act. Thus we proposed to require an annual 
verification of income for all individuals receiving services under the 
section 1915(k) State plan option. We proposed to implement this 
requirement at Sec.  441.510.
    Comment: We received many comments both in support and opposition 
of the proposed language specifying the institutional level of care 
requirement. Two commenters supported the proposed eligibility

[[Page 26838]]

language because they believe it gives States the opportunity to 
prevent or delay institutional care, and that providing better 
integration and coordination of services in less costly settings 
creates the potential for significant cost savings. Some of the 
commenters believe that by not requiring all individuals to meet the 
standards for an institutional level of care, States would have the 
option of using CFC program funds for less needy individuals who cost 
less to serve. One commenter believes the eligibility language furthers 
the spirit of the Olmstead decision. Several commenters indicated that 
some States use nursing facility level of care assessments that do not 
consider the cognitive impairments of individuals, such as those with 
traumatic brain injury or Alzheimer's Disease and that these 
individuals may not be able to conduct ADLs without cuing or 
compensatory strategies. Several commenters supported the provision 
specifying that the institutional level of care standard should only be 
applied to individuals with incomes above 150 percent of the FPL, and 
such a limiting requirement should not be applied to individuals with 
incomes at or below 150 percent. One commenter indicated that this 
population is especially vulnerable, with the poorest health status and 
the least resources to pay for services and supports. Some commenters 
expressed concern with the requirement that the level of care 
determination only applies to individuals whose income is above 150 
percent FPL. Commenters indicated that section 1915(k) of the Act is 
based upon the Community Choice Act [legislation introduced in the 
110th (H.R. 1621/S. 799) and 111th (H.R. 1670/S. 683) Congress, but not 
enacted] which required all eligible individuals to have an 
institutional level of care. The commenters believe that requiring 
States to serve individuals with both institutional and non-
institutional care needs could have the unintended effect of driving up 
the cost of implementing this program, and expressed concern that this 
will be a major deterrent for States to elect CFC.
    While many of the commenters acknowledged the statutory language is 
confusing, these commenters believe the interpretation provided in the 
regulation does not reflect Congressional intent. They indicated that 
the intent of the provision was to make CFC available only to 
individuals requiring an institutional level of care with the goal of 
deterring institutionalization or encouraging transitions for 
institutionalized individuals back to the community. Some commenters 
provided legislative history to support this conclusion. The commenters 
indicated the income eligibility was intended to match the State's 
income eligibility for institutional placement, stating that 150 
percent of the poverty line is established as a baseline for all 
States, but if a State allows a higher income level for nursing 
facility services then the higher income eligibility is what applies. 
The commenters indicated that the intent was to assure that if an 
individual could be income eligible for institutional placement then 
the individual would be income eligible for this benefit. The 
commenters believe this interpretation is underscored by the 
requirement in the statute that individuals be given a choice to 
receive the transitional services, described in section 
1915(k)(1)(D)(i) of the Act, which only applies to the population who 
would be otherwise eligible for institutional placement.
    One commenter requested we not apply an institutional level of care 
to anyone. Another commenter believes the requirement for individuals 
with incomes above 150 percent of the FPL to meet a nursing facility 
level of care is more restrictive than some State's existing financial 
criteria for some eligibility groups (for example, working disabled). 
Because of this, the commenter believes that many individuals eligible 
for State plan services would not be eligible for CFC. The commenter 
requested we reconsider requiring individuals to meet a nursing 
facility level of care so that those who are in need are not left out.
    Some commenters recommended the rule be amended to require States 
to limit eligibility to individuals with income of up to 300 percent of 
the maximum Federal SSI benefit and an institutional level of care 
need. The commenters suggested that only after a State addresses this 
eligibility group, may a State opt to expand the eligibility to serve 
lower income persons who do not have an institutional level of care 
need. Furthermore, the commenters recommended amending the regulation 
to allow States the option to only cover individuals who have an 
institutional level of care need.
    Several commenters requested clarification on the flexibility 
States have to limit who can receive CFC services. Several commenters 
expressed concern that States should not be allowed to establish a CFC 
program that only serves low income individuals who do not have to meet 
an institutional level of care.
    One commenter indicated the eligibility language in Sec.  
441.510(b)(2) appears to be inconsistent with the eligibility language 
in the ``Background'' section. The commenter stated that being eligible 
for nursing facility services in Medicaid differs from requiring an 
institutional level of care. For example, an individual with a 
developmental disability may require an institutional level of care at 
an ICF/MR, but that individual would not be eligible for nursing 
facility services. The commenter recommended the regulation expressly 
state that an individual must be eligible for nursing facility services 
or require an institutional level of care. Another commenter requested 
clarification around the institutional level provided in an institution 
for mental diseases (IMD). The commenter stated that IMDs are a payment 
exclusion, not a facility type, service or level of intensity.
    One commenter indicated that it appears that the first reference to 
eligibility for NF services may be redundant in Sec.  441.510(b)(2), 
and requests we remove or provide clarification as to its purpose.
    Response: The statute specifically sets forth the eligibility 
requirements for CFC. In our proposed rule, we interpreted the statute 
based on reading the clause ``* * * and with respect to whom there has 
been a determination that, but for the provision of such services, the 
individuals would require the level of care provided in a hospital, a 
nursing facility, an intermediate care facility for the mentally 
retarded, or an institution for mental diseases * * *'' to pertain only 
to the phrase immediately preceding it, which describes individuals 
with incomes greater than 150 percent of the poverty line. However, 
based on many comments, including those from the Congressional sponsors 
of CFC and from advocacy groups from the disability community, we have 
reconsidered the interpretation of the statute discussed in the 
proposed rule. We believe that the language, purpose, and history of 
the statute require a different interpretation. Commenters outlined the 
detailed historical efforts to have similar legislation passed since 
the 105th Congress and cited statements made during the 111th Congress' 
health reform debate, that the intent of section 1915(k) is to develop 
a program that improves access to community-based alternatives for 
individuals requiring services at an institutional level of care. Thus, 
the requirement in section 1915(k)(1) of the Act that the individual 
require an institutional level of care should be read as an independent 
requirement, and not as a requirement that modifies only the higher 
income

[[Page 26839]]

level. After careful review and consideration of the comments, we agree 
that section 1915(k)(1) of the Act should be read to require that an 
institutional level of care determination apply to all individuals who 
would be eligible for community-based attendant services and supports. 
Thus, we are issuing this interpretive rule to clarify that under the 
statute the institutional level of care requirement applies to those 
described earlier in the paragraph whose income does not exceed 150 
percent of the poverty line, as well as to those with higher incomes. 
For individuals whose income is above 150 percent of the FPL, the 
individual must be part of an eligibility group that provides access to 
the nursing facility benefit.
    We are revising Sec.  441.510 to state that, regardless of income, 
for individuals to receive CFC services, it must be determined, on an 
annual basis, that but for the provision of CFC services, the 
individual would meet an institutional level of care. We are also 
revising Sec.  441.510 to allow States, at their option, to waive the 
annual level of care requirement if the State, or designee, determines 
that there is no reasonable expectation of improvement or significant 
change in the participant's condition because of the severity of a 
chronic condition or the degree of impairment of functional capacity. 
Lastly, we acknowledge the confusion created by using the term ``level 
of care furnished in an IMD''. We are revising Sec.  441.510 to specify 
that this means a level of care furnished in ``an institution providing 
psychiatric services for individuals under age 21'' and ``an 
institution for mental diseases for individuals 65 or over''. This 
clarification is now expressed at Sec.  441.510(d).
    Comment: One commenter questioned whether CFC is an entitlement 
program.
    Response: The CFC program is an optional service available under 
the Medicaid program. States have the choice of whether to include this 
service in their Medicaid State plan. As an optional service, States 
also have the flexibility of offering this service to individuals 
qualifying for Medicaid under the categorically needy group only, or to 
both the categorically and the medically needy under the Medicaid State 
plan. Once the service is offered under a State plan, all eligible 
individuals who qualify for the service must be provided the care.
    Comment: We received many comments requesting clarification on 
whether CFC established a new eligibility group. Several commenters 
specifically requested that we allow States, at their discretion, to 
make the CFC population a separate categorical population for the 
purposes of automatically qualifying for Medicaid. The commenters 
stated this would allow people in need of CFC services to qualify for 
Medicaid in the same way individuals qualify for nursing facility 
services, HCBS waiver services, and HCBS State plan (section 1915(i)) 
services. The commenters believe the proposed regulation's language for 
access to CFC is more limited. The commenters do not believe that the 
Congress intended the eligibility pathways to CFC to be inferior to the 
pathways of other similar services and programs. Additionally, 
commenters noted that a separate CFC eligibility category is needed to 
allow individuals who could qualify for Medicaid in the medically needy 
category to receive CFC services in States that do not provide State 
plan services to the medically needy eligibility category. Another 
commenter believes the statutory language authorizes eligibility for a 
special-income level categorical population. Specifically the commenter 
believes the following statutory language ``individuals who are 
eligible for medical assistance under the State plan whose income does 
not exceed 150 percent of the poverty line, or, if greater, the income 
level applicable for an individual who has been determined to require 
institutional care'' is a clear reference to the special income level 
categorical populations authorized by 42 U.S.C. Sec.  
1396a(a)(10)(A)(ii)(V) and (VI) (relating to institutionalized 
individuals and HCBS waiver recipients, respectively). The commenter 
believes this language demonstrated Congressional intent to allow 
States to make the CFC benefit available to individuals with incomes up 
to 300 percent of the Federal SSI benefit rate, the same way that 
States may make nursing facility services, HCBS waiver services, and 
HCBS State plan benefit services available to them. In addition to the 
CFC statutory language, the commenter believes that the statutory 
language in the Deficit Reduction Act and the Affordable Care Act show 
that the Congress intended to create a new, income-based categorical 
eligibility population for HCBS State plan and CFC beneficiaries. The 
commenter believes that failure to create a separate categorical 
eligibility for CFC would result in unfair outcomes for beneficiaries. 
The commenter believes CMS has discretion to authorize separate 
eligibility categories. Another commenter requests clarification of the 
meaning of ``eligible for medical assistance under the State plan'' 
with regard to States that have opted to use the special income 
standard at section 1902(a)(10)(A)(ii)(V) of the Act for 
institutionalized individuals. The commenter believes the CFC statute 
and the proposed regulation would prohibit access by those who would 
only be eligible for Medicaid by virtue of residing in a medical 
institution.
    Response: Section 1915(k) of the Act did not amend section 
1902(a)(10) of the Act to the establish a new eligibility group of 
individuals receiving 1915(k) services. Section 1915(k) of the Act 
created new pathways for Medicaid eligible individuals to receive home 
and community-based attendant services and supports. To receive 
services under 1915(k), individuals must be eligible for medical 
assistance under the State's Medicaid plan, must meet an institutional 
level of care, and be in an eligibility group under the State plan that 
includes nursing facility services. If the individual is in an 
eligibility group under the State plan that does not provide coverage 
of nursing facility services, the individual must have income that is 
at or below 150 percent of the federal poverty line.
    Comment: One commenter believes that individuals must only be 
eligible for section 1915(c) HCBS waivers or section 1115 
demonstrations, rather than be enrolled and receiving waiver services, 
to be eligible for CFC.
    Response: Section 1915(k)(1) of the Act provides that individuals 
must be eligible for Medicaid under an eligibility group covered by the 
State plan. As noted above, to be eligible for Medicaid under the 
special HCBS waiver group, individuals must receive at least one 
section 1915(c) waiver service per month.
    Comment: One commenter requested with regard to Sec.  
441.510(b)(3), we confirm that there is not an eligibility group 
specific to waiver programs, but that section 1902(a)(10)(A)(ii)(V) of 
the Act allows individuals in institutions to be eligible under the 300 
percent Special Income Group and section 1902(a)(10)(A)(ii)(VI) of the 
Act allows for application of the 300 percent Special Income Group to 
those individuals receiving HCBS as an alternative to institutional 
care.
    Response: We included the reference to the special income group in 
the CFC regulation to highlight that States may offer section 1915(k) 
services to individuals who qualify for Medical assistance under the 
special home and community-based waiver eligibility group defined at 
section 1902(a)(10)(A)(ii)(VI) of the Act and who receive at least one 
home and

[[Page 26840]]

community-based waiver service per month. The special income group is 
an example of an eligibility group States may cover under the special 
home and community-based waiver group. It is our intent to permit 
people in section 1915(c) home and community-based waiver programs to 
receive section 1915(k) services also. We are moving this language to 
Sec.  441.510(e), removing paragraph (b)(3), and making a technical 
correction to replace the term ``Medicaid assistance'' with ``medical 
assistance.''
    Comment: One commenter requested we clarify whether an individual 
qualifying for Medicaid under the Family and Children's and Medicare 
savings eligibility categories are eligible to receive CFC services.
    Response: Individuals must be eligible for Medicaid under an 
eligibility group covered by the State plan. If these are eligibility 
groups the State covers under its Medicaid State plan, they could be 
eligible to receive services under CFC as long as the individuals meet 
all other eligibility criteria. However, we note that Medicare 
beneficiaries eligible for Medicaid only for Medicare cost-sharing, 
such as Qualified Medicare Beneficiaries, would not be eligible for CFC 
services unless they are eligible for full Medicaid benefits under 
another State plan group.
    Comment: Some commenters requested we clarify whether a State is 
required to cover all of the income levels defined at Sec.  441.510 or 
whether a State could limit eligibility to only one or two of the 
income levels. One commenter questioned if a State could exclude State 
plan individuals qualifying under the medically needy group from 
receiving CFC services.
    Response: If an individual is eligible for medical assistance under 
the State plan, meets an institutional level of care; and is part of an 
eligibility group with access to the nursing facility benefit (or if 
part of an eligibility group without access to the nursing facility 
benefit with an income at or below 150 percent FPL) then the State must 
allow the provision of CFC services if the State elects to include the 
CFC state option as part of its State plan. Please note that CFC is an 
optional service, therefore, as with any other optional service 
available under the State plan, it is at the State's discretion to 
provide these services to the medically needy group in addition to the 
categorically eligible group.
    Comment: Some commenters questioned if a State has the flexibility 
to limit CFC recipients to their current FPL or whether they would have 
to expand to 150 percent FPL. Another commenter questioned if a State 
could impose stricter eligibility than 150 percent of the FPL.
    Response: Section 1915(k) of the Act does not permit States to 
increase income standards or to impose stricter income standards for 
covered eligibility groups. If the income standard for a covered group 
is less than 150 percent of the FPL, States may not increase it or 
decrease it for individuals who will receive CFC services.
    Comment: One commenter requested clarification regarding 
eligibility groups that are automatically eligible for Medicaid without 
regard to income, and the application of the 150 percent limit above 
which institutional level of care is required. For example, some States 
provide eligibility without an income test to children eligible for 
foster care or adoption assistance, women receiving treatment for 
breast or cervical cancer, and individuals with section 1619(a) or (b) 
status. The commenter requests clarification as to whether States are 
required to identify income for these groups to determine eligibility 
for CFC services, or whether States should assume that all individuals 
in these ``automatic'' categories are eligible, regardless of level of 
care status.
    Response: As indicated above, we have revised the regulation to 
require all individuals receiving CFC services to meet an institutional 
level of care. Individuals who meet the eligibility requirements for a 
Medicaid group for which the State provides full State plan services 
may receive CFC services if: (a) They satisfy the institutional level 
of care requirement; and (b) they are in an eligibility group that 
includes nursing facility services under the State plan, or, if their 
eligibility group does not include nursing facility services under the 
State plan, their income is at or below 150 percent of the FPL.
    Comment: One commenter requested clarification on what is 
considered a ``special population.''
    Response: We did not use the term ``special population'' in the 
preamble or regulatory text. If the commenter is referring to our 
reference to the ``special home and community-based waiver 
eligibility'' group defined at section 1902(a)(10)(A)(ii)(VI) of the 
Act and our use of the term ``special income level group'', we are 
referring to individuals eligible for Medicaid through meeting the 
eligibility for HCBS waivers services under institutional rules.
    Comment: One commenter questioned how an individual's assets are 
considered in determining financial eligibility for the CFC option.
    Response: An individual receiving services under the CFC option 
must be eligible for Medicaid under the State plan. Therefore, the 
State's usual Medicaid eligibility rules would determine whether and 
how the individual's assets are counted in determining eligibility for 
Medicaid. This may vary from group to group. There are no additional 
special CFC rules regarding assets.
    Comment: Several commenters recommended the regulation allow 
individuals who would qualify for Medicaid under the medically needy 
eligibility group to qualify in the low-income category. The commenters 
believe individuals with income over 150 percent FPL in the medically 
needy group should be included in the low-income group because the 
medically needy group is required to spend down to 75 percent of FPL to 
qualify for Medicaid. The commenters believe it would be costly and 
administratively burdensome for States to implement two sets of 
eligibility criteria for CFC. Several commenters indicated that as 
written, the proposed rules potentially exclude individuals who would 
otherwise qualify for a Medicaid-funded nursing facility placement 
because their gross income would be too high. The commenters recommend 
the regulation be revised to have language clarifying that individuals 
who may spend down to Medicaid eligibility under the medically needy 
category would also be eligible for the CFC benefit.
    Response: The rule does not preclude States from providing 1915(k) 
services to individuals who are Medicaid eligible as medically needy. 
If a State covers the medically needy eligibility group under its State 
plan, the State can elect to provide section 1915(k) services to the 
medically needy. In determining Medicaid eligibility for medically 
needy individuals receiving section 1915(k) services, the State must 
use the same income and resource methodologies approved under its State 
plan (for the medically needy), including spend down and any 
methodologies approved under section 1902(r)(2) of the Act.
    Comment: One commenter recommends paragraph Sec.  441.510(c) be 
amended to add language articulating that the regular rules for 
determining income eligibility for an individual's eligibility group 
under the State plan apply when determining whether the individual's 
income is below 150 percent of FPL.
    Response: We agree with the recommendation made by the commenter 
and will revise this provision accordingly.
    Comment: One commenter indicated that cash payments to purchase 
personal attendant services or used to purchase

[[Page 26841]]

services that substitute for human assistance should not be counted as 
income or resources when determining eligibility for public benefit 
programs or income tax purposes. The commenter indicated that problems 
could arise if the cash benefit is treated as income, that when added 
to the individual's actual income would disqualify the individual from 
the public benefit programs.
    Response: Disbursement of cash to individuals in accordance with 
Sec.  441.545(b)(2) is for the sole purpose of purchasing program 
approved services and supports identified in an individual's person 
centered service plan. Therefore, for the purpose of determining an 
individual's Medicaid eligibility, receipt of such monies should not be 
considered income, nor should it have any effect on an individual's 
eligibility for Medicaid. Determining the treatment of income for the 
income tax purposes is beyond the scope of this rule, as such, we do 
not have the authority to opine on tax related issues.
    Comment: Many commenters recommended the regulation be modified to 
explicitly address the Affordable Care Act's modification to the 
spousal impoverishment statute that goes into effect January 1, 2014. 
The commenters expressed concern that if CFC is limited strictly to 
individuals who qualify under an eligibility group covered under the 
State plan before they may receive coverage for the benefit, the 
community spouse resource allowance will be meaningless for most CFC 
beneficiaries, because most CFC beneficiaries will have been screened 
against the more limited ``couple'' resource standard applicable to the 
category under which they originally qualified. Additionally, 
commenters requested the full spousal impoverishment protection be 
extended.
    Response: The rule does not need to be modified to reflect section 
2404 of the Affordable Care Act because eligibility for the CFC 
services hinges on independent eligibility under an eligibility group 
in the State's plan. Guidance on section 2404 of the Affordable Care 
Act is outside the scope of this regulation.
    Comment: One commenter stated that the eligibility criteria 
included in the regulation does not include a needs assessment element. 
The commenter believes that CFC services and supports are not medical 
and as such it is not appropriate for a State to set ``medical 
necessity'' criteria to establish who can receive CFC services. The 
commenter recommends CMS consider adding a new eligibility element to 
specifically assess an individual's need for attendant services.
    Response: We disagree with the commenter. Section 441.535 requires 
an assessment of functional need for each individual receiving CFC 
services. The information gathered in the assessment must support the 
determination that an individual requires CFC services.
    Comment: One commenter requested the regulation clarify whether 
both non-institutional and institutional individuals must be served.
    Response: Although the eligibility criteria require individuals to 
meet an institutional level of care, services are only available to 
individuals residing in a home and community-based setting. Recognizing 
the purpose of these services includes providing individuals living in 
institutions the opportunity to transition to a home and community-
based setting, we understand that individuals may be residing in an 
institution during the assessment process of the program. However, CFC 
may not be provided until the individual is residing in the community, 
with the exception of transitional services.
    Comment: A few commenters recommended revising the regulation to 
add a paragraph to Sec.  441.510, clarifying that the CFC option is not 
mutually exclusive and can be provided to eligible Medicaid enrollees 
in the State who are receiving other non-CFC services and supports 
under another waiver program. Specifically, the commenters recommend 
that a paragraph (d) should be added to Sec.  441.510 providing that 
``Individuals receiving services through CFC will not be precluded from 
receiving other home and community-based long term care services 
through other waiver or State plan authorities.''
    Response: We agree with the commenter and have included the 
recommended language in a new paragraph (e).
    Comment: Several commenters requested we clarify whether States 
have the flexibility to establish medical or functional eligibility 
criteria. One commenter asked if a State can impose the same functional 
eligibility requirements that exist for a State's personal care State 
plan option. Several other commenters requested we allow States to 
establish medical eligibility criteria that would limit eligibility for 
the program to individuals who have an institutional level of care, 
regardless of their income. The commenters believe that without this 
clarification, States could perceive the option as too expensive to 
adopt if they have to serve both non-institutional and institutional 
level beneficiaries. Alternatively, one commenter recommended the 
regulations require that any medical or functional criteria States 
establish for CFC not be more restrictive than the State's nursing 
facility or other institutional level of care requirements.
    Response: As indicated in an earlier response, we are interpreting 
the statute to include a requirement that States make determinations 
for all individuals receiving CFC services that an institutional level 
of care would be required but for the provision of home and community-
based services.
    Comment: One commenter supports the eligibility and statewideness 
requirements in the regulation, indicating that this will prevent 
States from limiting services to a numeric amount or to a geographic 
area, with the result being increased access to home and community-
based services by those in need. The commenter stated that States still 
have flexibility to set medical necessity. The commenter requested CMS 
monitor State efforts to educate all beneficiaries of the program, 
expressing concern that States may tailor public relations activities, 
such as limiting outreach efforts, to certain geographic areas of the 
State.
    Response: States must offer CFC services on a statewide basis. As 
indicated in an earlier response, all individuals must meet an 
institutional level of care to receive CFC services. Thus, there is no 
need for States to establish separate medical necessity criteria, for 
the purpose of determining who may receive CFC services.
    Comment: Some commenters recommended the rule be amended to require 
States to limit eligibility to individuals with income of up to 300 
percent of the maximum Federal SSI benefit and an institutional level 
of care need. The commenters suggested that only after a State 
addresses this eligibility group, may a State opt to expand the 
eligibility to serve lower income persons who do not have an 
institutional level of care need. Furthermore, the commenters 
recommended amending the regulation to allow States the option to only 
cover individuals who have an institutional level of care need.
    Response: As we have stated, we are setting forth in this final 
rule our interpretation that under the statute all individuals must 
meet an institutional level of care to receive CFC services.
    Comment: One commenter does not want the institutional level of 
care requirement applied to the special income group.
    Response: The special income group is an institutional eligibility 
group.

[[Page 26842]]

Therefore, States must follow the rules pertaining to the eligibility 
requirements for the special income group defined at section 
1902(a)(10)(A)(ii)(V) of the Act, which includes the requirement that 
individuals must meet an institutional level of care.
    Comment: With regard to the special income group, commenters 
questioned if case management or monthly monitoring would satisfy the 
requirement that individuals must receive at least one home and 
community-based waiver service per month. Additionally, the commenters 
requested the language be revised to say ``is receiving at least one 
home and community-based waiver service per month or monthly 
monitoring.''
    Response: The purpose of this language is to ensure that people in 
the special income group maintain their eligibility for Medicaid, 
thereby adhering to the CFC eligibility criteria that people must be 
eligible for the State plan. If monthly monitoring is an approved 
waiver service in the State, this would satisfy the requirement.
    Comment: A few commenters requested clarification on whether States 
had to extend CFC services to individuals in the waiver program. The 
commenters recommended revising Sec.  441.510(b)(3) to state ``eligible 
if the State elects to expand CFC service coverage to its waiver 
program.'' Another commenter expressed concern about the potential 
overutilization of services if individuals eligible for waivers are 
required to continue to receive one waiver service to maintain 
eligibility for CFC.
    Response: Individuals enrolled in section 1915(c) waivers are 
eligible to receive any State plan service. Individuals in the special 
home and community-based waiver group are required to receive at least 
one waiver service per month. Section 1915(k) of the Act did not change 
this requirement. We expect States to implement policies and procedures 
to prevent overutilization and duplication of services when individuals 
receive services through a 1915(c) waiver and the CFC State plan 
option.
    Comment: We received many comments both opposed to and in support 
of the annual income requirement set forth in Sec.  441.510. Some 
commented on the methods for verification, such as recommending 
``Passive redetermination'' and that income recertification for CFC 
should not be more burdensome, for individuals or for States, than the 
existing Medicaid programs.
    Response: As explained above, in the final rule, we are modifying 
our regulations to make clear that the 150 percent of FPL income 
determination would only be necessary in cases where an individual is 
not in a Medicaid eligibility group under the State plan that already 
provides coverage for nursing facility services. In such cases, there 
would need to be an annual verification of income for the purpose of 
determining an individual's eligibility for CFC services.
    States that employ passive eligibility re-determination methods for 
the purpose of Medicaid eligibility could continue to do so. 
Additionally, we believe it is appropriate for the State to align this 
CFC requirement with the annual recertification process for Medicaid.
    Upon consideration of public comments received, we are modifying 
Sec.  441.510, and are issuing an interpretive rule to clarify the 
statutory requirements for eligibility. We are revising the language in 
Sec.  441.510(b) as originally proposed. We are clarifying the 
statutory requirement that individuals must be in an eligibility group 
under the State plan that includes nursing facility services. 
Individuals in an eligibility group that does not include such nursing 
facility services must have an income at or below 150 percent of the 
FPL. We added the language proposed at Sec.  441.510(c) to Sec.  
441.510(2) with clarification that in determining whether 150 percent 
of the FPL requirement is met, State must apply the same methodologies 
as would apply under their Medicaid State plan, including the same 
income disregards in accordance with section 1902(r)(2) of the Act. We 
replaced the language proposed at Sec.  441.510(c) with the provision 
that all individuals meet an institutional level of care, removing the 
term ``an institution for mental diseases'' and replacing it with ``an 
institution providing psychiatric services for individuals under age 
21'' and ``an institution for mental diseases for individuals age 65 or 
over,'' and adding Sec.  441.510(c)(1) and (2) to allow for State 
administering agencies to permanently waive the annual level of care 
recertification if certain conditions are met. We have relocated the 
language proposed at Sec.  441.510(b)(3) to a new paragraph (d), and 
removed the term ``Medicaid assistance'' and replaced it with ``medical 
assistance.'' We are also adding a new paragraph (e) to indicate that 
receipt of CFC services does not impact receipt of other long-term care 
services provided through other Medicaid State Plan, waiver, or grant 
authorities.

E. Statewideness (Sec.  441.515)

    To reflect the requirement at section 1915(k)(3)(B) of the Act, we 
proposed that States must provide CFC services and supports on a 
statewide basis, in a manner that provides such services and supports 
in the most integrated setting appropriate to the individual's needs, 
and without regard to the individual's age, type or nature of 
disability, or the form of home and community-based attendant services 
that the individual requires to have an independent life.
    Comment: Many commenters supported the provisions under Sec.  
441.515. One commenter applauded CMS for recognizing that people should 
receive services and supports based on their need rather than a 
predetermined assumption based on characteristics, such as age or 
disability. Several commenters further emphasized the ability of this 
program to enhance State adherence to the Olmstead decision and 
providing services in the most integrated setting appropriate to the 
individual's needs.
    Response: We appreciate the perspectives these commenters had in 
support of this provision of the rule.
    Comment: One commenter asked CMS to clarify how we will define the 
``most integrated setting appropriate to the individual's needs.''
    Response: This requirement is not defined in the statute and we do 
not believe that is it appropriate to define this phrase in this 
regulation. Rather, we expect States implementing CFC to have 
meaningful interactions with each individual electing to receive CFC 
services and supports. Through the assessment of functional need and 
the development of the person-centered service plan, individuals should 
be made aware of all living arrangements available for their 
consideration. As indicated below at ``Person-centered service plan'' 
(Sec.  441.540), a requirement of the service plan is a description of 
these options and a reflection of the individual's choice. These 
protections represent significant advances in facilitating individuals' 
rights to live in the most integrated setting appropriate to their 
needs. We plan to publish a separate proposed rule to define home and 
community based settings and issue additional guidance which should 
further assist States in these efforts.
    Comment: One commenter recommended that CMS clarify that it is 
within the State's discretion to limit the amount, duration, and scope 
of the required services within CFC.
    Response: As indicated in the responses to questions received in 
the ``Basis and Scope'' (Sec.  441.500) section of

[[Page 26843]]

the regulation, CFC is an optional benefit and a State may set limits 
on the amount, duration and scope of the services provided under the 
option, consistent with the regulation at Sec.  440.250. However, 
section 1915(k)(3)(B) of the Act indicates that the services must be 
provided on a statewide basis without regard to the individual's age, 
type or nature of disability, severity of disability, or the form of 
home and community-based attendant services and supports that the 
individual requires to lead an independent life. There requirements are 
reflected at Sec.  441.515. A State cannot set limits on the amount, 
duration, and scope based on any elements listed above.
    Comment: A few commenters indicated that the language in Sec.  
441.515(c), ``in a manner that provides the supports that the 
individual requires to lead an independent life'' is broad. One 
commenter suggested removing the language, but offered the suggestion 
of defining such supports in Sec.  441.520, ``Required Services,'' if 
the language is not removed. Another commenter asked if a State could 
set reasonable parameters on the level of support commitment such as an 
annual service budget amount limit or a cap on the hours of paid care 
per day.
    Response: As noted above, States maintain the flexibility to set 
limits on the amount, duration and scope, except based on the 
individual's age, type or nature of disability, severity of disability, 
or the form of home and community-based attendant services and supports 
that the individual requires to lead an independent life. While the 
majority of the language in Sec.  441.515(c) was taken from the 
statute, we realize that making this language separate from the 
language in Sec.  441.515(b) could create confusion, so we are taking 
this opportunity to remove Sec.  441.515(c) and incorporate its 
language in Sec.  441.515(b) to more directly align with the statute.
    Comment: One commenter encouraged CMS to issue guidance or add 
language to the regulation to ensure that CFC is provided to all 
qualified applicants in the State regardless of sexual orientation, 
gender identity or expression, or marital status.
    Response: Section 441.500(b) addresses this concern specifying that 
CFC is designed to make available services and supports to eligible 
individuals. It is not permissible for a State to deny the provision of 
medical assistance services to eligible individuals based on sexual 
orientation, gender identity or expression, or marital status. We do 
not agree that additional language needs to be added to the regulation 
to clarify.
    Comment: A few commenters asked whether States would be afforded 
the flexibility to target specific populations.
    Response: As noted above, States electing CFC must provide CFC 
services and supports on a statewide basis and without regard to the 
individual's age, type or nature of disability, severity of disability 
or the form of home and community-based services and supports that the 
individual requires to lead an independent life. This requirement does 
not allow States to target any specific population.
    Comment: One commenter requested clarification regarding the 
statewide implementation of the CFC. Specifically, the commenter asked 
if CFC can be implemented throughout the State incrementally over time 
or if the option must be statewide upon implementation.
    Response: If a State chooses to implement CFC, it must be 
implemented on a statewide basis, not phased-in incrementally 
throughout the State.
    After consideration of the public comments, we are revising this 
section to remove Sec.  441.515(c) and incorporate its language in 
Sec.  441.515(b) to more directly align with the statute.

F. Included Services (Sec.  441.520)

    We proposed to reflect the requirements at sections 1915(k)(1)(A) 
and (B) of the Act that States electing CFC must provide:
     Assistance with ADLs, IADLs, and health-related tasks 
through hands-on assistance, supervision, or cueing;
     The acquisition, maintenance and enhancement of skills 
necessary for the individual to accomplish ADLs, IADLs, and health-
related tasks;
     Backup systems or mechanisms to ensure continuity of 
services and supports; and
     Voluntary training on how to select, manage, and dismiss 
attendants.
    We also proposed to require that States choosing to provide for 
permissible services and supports as set forth at section 1915(k)(1)(D) 
of the Act, must offer at a minimum, expenditures for transition costs 
such as rent and utility deposits, first month's rent and utilities, 
bedding, basic kitchen supplies, and other necessities required for an 
individual to transition from a nursing facility, institution for 
mental disease, or ICF/MR to a community-based home setting where the 
individual resides. States choosing to provide for permissible services 
and supports set forth at section 1915(k)(1)(D) of the Act may also 
include expenditures that increase independence or substitute for human 
assistance, to the extent that expenditures would otherwise be made for 
human assistance.
    Comment: One commenter indicated that the proposed rule is not 
clear regarding whether all services and supports listed at Sec.  
441.520(a) must be provided to all individuals served under CFC, and 
the commenter provided cost estimates if each potential participant 
were provided a pager (including device and monthly service charges). 
The commenters indicated that it would be cost prohibitive for their 
State to provide each participant all the services and recommended it 
be made clear that the services and supports listed in (i) through 
(iii) are to be made available based on parameters indicated in each 
State Medicaid plan. For example, backup systems that include 
electronic devices may only be needed by persons who have high level of 
care needs, while persons with greater functioning across ADLs or IADLs 
may simply require advance planning in case their attendant fails to 
show up for work.
    Response: The ``Background'' and the ``Provision of the Proposed 
Rule'' sections both indicated that the services listed under Required 
Services must be made available by States electing CFC. This does not 
mean that each and every individual participating in CFC would receive 
each of these services. Each individual's needs must be assessed, and 
only those required services needed by the individual must be provided. 
As indicated above, States have the flexibility to decide what backup 
systems and supports will be offered in their CFC programs as long as 
these systems will sufficiently meet the needs of individuals served 
under CFC.
    Comment: One commenter asked if States could design a CFC program 
where each participant may not receive all of the four required 
services in paragraph (a).
    Response: All services listed in Sec.  441.520(a) must be made 
available by any State that elects the CFC. The services authorized for 
individuals must be based upon their individualized assessment of 
functional need.
    Comment: One commenter specifically asked if CFC could be used to 
support consumers' employment goals.
    Response: As indicated at section 1915(k)(1)(C) of the Act, 
vocational rehabilitation services under the Rehabilitation Act of 1973 
are specifically excluded by the statute; however, we affirm that 
attendant services and supports under the CFC

[[Page 26844]]

could be utilized by an individual while at their place of employment.
    Comment: One commenter urged CMS to provide additional guidance 
regarding the frequency with which required services may be provided 
stating that individuals with mental illness may not require assistance 
with ADLs and IADLs 24 hours a day/7 days a week as these individuals 
are often able to accomplish these tasks independently, particularly 
when personal assistance is supplemented by skills training. The 
commenter suggested that CMS clarify at Sec.  441.520(a)(1) that 
assistance need not be furnished on a constant, 24/7 basis.
    Response: While we agree with the commenter that individuals may 
not require assistance with ADLs and IADLs 24 hours a day/7 days a 
week, we do not agree that this needs to be clarified in the 
regulation. The amount of supports and services provided under this 
option are determined based on an individualized assessment of 
functional need.
    Comment: One commenter requested that CMS clarify ``health-related 
tasks'' and asked if these include medication administration and other 
paramedical tasks such as g-tube feeds, ostomy care, wound care, etc. 
and if so, for individuals self-directing their personal care, would 
these tasks be furnished by personal care attendant care providers who 
are employed by the individual (responsible for training and 
supervising the attendant care provider) where there is no nurse 
involvement. The commenter also inquired how assistance with 
medications is accounted for. Another commenter added that State Nurse 
Practice Acts vary greatly and have very specific requirements 
regarding what types of health-related tasks may be delegated and/or 
overseen by licensed medical professionals, such as registered nurses. 
In addition, the commenter requested that CMS add language 
acknowledging that the scope of the health-related tasks may vary by 
State and added that for health services that are not delegated under a 
State Nurse Practice Act or in States without nurse delegation, such 
services would have to be delivered under State plan home health or 
waiver skilled nursing benefits.
    Response: The statute specifically defines ``health-related tasks'' 
as ``specific tasks related to the needs of an individual, which can be 
delegated or assigned by licensed health-care professionals under State 
law to be performed by an attendant.'' Given this definition, 
activities that are not able to be delegated or assigned by a licensed 
professional under State law are not ``health-related tasks.'' 
Recognizing the variance among State laws governing the specific tasks 
licensed health-care professionals may delegate, we recognize that the 
scope of ``health-related tasks'' will differ by State. This will be 
the case regardless of the service delivery model utilized by the 
State, including self-direction. We agree with the commenter that 
activities outside the scope of ``health-related tasks'' may continue 
to be claimed, as appropriate, through other Medicaid authorities such 
as home health, rehabilitative services, services provided by other 
licensed practitioners, etc.
    Comment: One commenter indicated strong support for inclusion of 
the phrase ``hands on assistance, supervision, or cueing'' in Sec.  
441.520(a)(1), as persons with different disabilities require different 
types of assistance. Another commenter urged CMS to consider whether 
the use of ``and/or'' in ``hands on assistance, supervision, or 
cueing'' would make it clear that a combination of methods may be used 
for any particular individual, depending on what is needed. One 
commenter asked if there is State flexibility to focus on only a single 
modality (hands-on or supervision or cueing) or if all 3 modalities 
must be covered.
    Response: We understand that what is needed to assist with ADLs, 
IADLs, and health-related tasks will vary from individual to individual 
and expect that any one, or a combination of, hands on assistance, 
supervision, or cueing could be necessary to accomplish these tasks. As 
such, all three modalities must be available, however, it is an 
individual's assessed needs and person centered plan that will 
determine which will be provided. We agree with the commenter and have 
revised the rule to include ``and/or'' to make our intent clear.
    Comment: A few commenters asked if there was any additional 
guidance regarding what services constitute the ``acquisition, 
maintenance, and enhancement of skills necessary for the individual to 
accomplish ADLs, IADLs, and health-related tasks.'' Several commenters 
indicated that States should have the same discretion they already 
exercise in structuring their waiver programs and recommended that CMS 
make explicit that States will have the discretion to define the 
services that will be provided to assist consumers with the 
``acquisition, maintenance and enhancement of skills necessary for the 
individual to accomplish ADLs, IADLs, and health-related tasks'' and 
suggested the following language be added to the rule: ``as defined by 
the State and approved by the Secretary.'' Another commenter added that 
to assure consistency with other home and community-based services 
programs and to allow States to define services, CMS should revise 
paragraph (a) to add ``If a State elects to provide the Community First 
Choice Option, the State must provide all of the following services as 
defined by the State and approved by the Secretary.''
    Response: The ``acquisition, maintenance, and enhancement of skills 
necessary for an individual to accomplish ADLs, IADLs, and health-
related tasks'' is a direct provision of the statute and we agree with 
the commenters that States should have the same discretion they 
currently have to define their programs, particularly, since CFC is an 
optional benefit.
    We have chosen not to specifically define this component of the CFC 
benefit to facilitate State flexibility. States will need to define how 
they will implement this component through their SPAs. States could 
choose several methods to meet their obligations for this component of 
the benefit, including, but not limited to, incorporating functional 
skills training and/or the use of permissible services and supports 
that facilitate the acquisition, maintenance, and enhancement of skills 
through the purchasing of services and/or supports that increase 
independence or substitute for human assistance. We are available to 
provide technical assistance to States in determining alternative ways 
to satisfy this requirement.
    Comment: A commenter noted that for the acquisition, maintenance 
and enhancement of skills, such services may be unrealistic or 
unnecessary for elderly persons in extremely fragile health, or whose 
health is deteriorating (such as cancer patients), but appropriate for 
other persons with disabilities. The commenter believes that the 
statute gives States flexibility in these cases by identifying the 
acquisition, maintenance and enhancement of skills as an ``included 
service and support'' and recommends the CMS clarify in the regulations 
that States provide these services to individuals likely to benefit 
from them, based on the assessment of functional need and individual 
service plan, and consistent with the CFC philosophy of self-direction.
    Response: We appreciate the perspective of this commenter. 
Ultimately, each individual's assessment of functional need should 
determine whether or not an individual needs the acquisition, 
maintenance, and enhancement of skills necessary for accomplishment of 
ADLs, IADLs, and

[[Page 26845]]

health-related tasks. If it is determined that an individual needs 
them, a State would be required to provide them, according to the 
parameters of the person-centered service plan discussed at Sec.  
441.540. However, we do reiterate a State's ability to put limits on 
the amount, duration and scope of CFC services, as long as these limits 
are not based on the individual's age, type or nature of disability, 
severity of disability, or the form of home and community-based 
attendant services and supports that the individual requires to lead an 
independent life, as prohibited in the statute.
    Comment: A commenter stated strong support for both the inclusion 
of backup systems or mechanisms to ensure continuity of services and 
supports, and the training of how to select, manage and dismiss 
attendants referenced at Sec.  441.520(a)(3) and (4), respectively. One 
commenter questioned if cell phones funded under Federal programs (for 
example, Safe Link) can be considered for use to meet backup system 
requirements. Another commenter recommended amending this rule to allow 
for plans of action in case of emergency, such as identifying a friend 
or relative who could be called upon if a provider does not show up, or 
calling for emergency backup through a local public registry. One 
commenter suggested that the plan for continuity of services (if 
existing services are disrupted) should be flexible and participant-
driven, much like the plan for services.
    Response: There are various options for backup systems. We agree 
with the commenters that backup systems and supports may include 
approaches in addition to electronic devices. This belief is supported 
by the inclusion in the definition described in the proposed rule of 
allowing people to be included as backup supports. We agree that a cell 
phone funded under another program (Federal or otherwise) could be used 
as part of a backup system, assuming doing so does not violate any 
terms of use required by the other program. However, it is important to 
note that items or services provided through another program or benefit 
are not eligible for Federal financial participation (FFP) under CFC.
    Comment: One commenter voiced concern that States will develop a 
``canned'' ``one size fits all'' voluntary training package or program 
specified in Sec.  441.520(a)(4), and suggested that the voluntary 
training needs to be very flexible and individualized. Another 
commenter recommended that training be a required step in demonstrating 
that the individual has the tools to select, manage, and dismiss 
attendants. One commenter indicated that, consistent with the 
philosophy of self direction, this training must be voluntary and not a 
mandatory requirement for the individual to receive services under CFC, 
and requested that CMS allow States to provide established, existing 
consumer training programs already available to consumers/employers. 
Another commenter stated that, it is important that all training 
content and procedures be driven by the participants themselves, and 
while the proposed rule specifies that training be ``developed'' by 
States, the commenter pointed out that various training curricula 
already exist, and suggested that one method to control costs would be 
to modify and adopt existing training approaches, as long as such 
training is agreed upon by participants and the methods are sensitive 
to the training needs of the targeted groups (for example, accessible 
format, at no cost, web-based, etc.). Another commenter encouraged CMS 
to allow States to retain the authority to develop this training with a 
level of flexibility that would be appropriate to meet the needs of all 
potential CFC participants.
    Response: As the commenters indicated, many States currently have 
existing consumer training programs available that could potentially be 
leveraged or modified to meet this requirement. These training programs 
should be able to meet the needs of individuals at varying levels of 
need with regard to selecting, managing, and dismissing attendants. As 
we stated in the proposed rule, consistent with the philosophy of self 
direction, and in keeping with the statute set forth at section 
1915(k)(1)(B)(iii) of the Act, this training must be voluntary, and may 
not be a mandatory requirement for the individual to receive services 
under this option.
    Comment: A few commenters suggested that CMS create a separate 
section for permissible purchases to reduce confusion. One commenter 
added that since Sec.  441.520(b) begins a list of optional services, 
CMS should begin a new section here to clarify that these services are 
not required services. The commenter added that CMS should clarify at 
(b)(1) that ``the waiver'' would not cover rent as this is excluded.
    Response: We are renaming Sec.  441.520 as ``Included Services'' to 
reduce confusion and to highlight that permissible services and 
supports in paragraph (b) are at the State's option. We also reiterate 
that CFC is not a waiver program, but rather a new optional service 
authorized under the Medicaid State plan. With regard to the 
commenter's suggestion about the exclusion of rent, while ``room and 
board'' are excluded services, expenditures related to transition 
costs, including the first month's rent, are the exception. Therefore, 
we do not agree that revisions are necessary.
    Comment: One commenter asked whether an individual receiving 
services through CFC and a section 1915(c) waiver could receive 
assistive devices if they are covered services in the waiver.
    Response: Assistive devices and assistive technology services may 
be provided under CFC if the requirements under Sec.  441.520(b) are 
met. It would be up to the State to choose whether to provide these 
items through a waiver, or through CFC, if an individual is 
participating in both programs.
    Comment: One commenter asked that CMS clarify the minimum services 
that must be offered if a State chooses to provide permissible 
services.
    Response: While we proposed to require that States offering 
permissible services and supports must at a minimum provide for 
transition costs, we realized that the statute does not provide a basis 
to require such services and supports. Therefore, the provision of 
permissible services and supports are at the State's option. We 
strongly encourage States to consider providing for the transition 
services and supports at paragraph (b)(1) under Sec.  441.520.
    Comment: One commenter indicated that States need to have the 
flexibility in permissible purchases to set limitations on these costs 
including the total amount, recurrence, etc.
    Response: States have the flexibility to design their CFC benefit 
as long as all requirements are met. States maintain the flexibility to 
set reasonable limitations on the costs of permissible services and 
supports. We encourage States to consider the ability of beneficiaries 
to actually return to the community when establishing limits on these 
services and supports. We will work with States on an individual basis 
to ensure the intent of the legislation is met, while acknowledging the 
realities of State fiscal situations.
    Comment: One commenter voiced concern that permissible purchases, 
including expenditures necessary for an individual to transition from 
institutional care and expenditures for items that could increase 
independence or substitute for human assistance, are considered 
optional for States electing to offer CFC. The commenter added that 
these optional services in many cases would make the difference between 
whether an individual can live successfully in the community or not

[[Page 26846]]

and suggested that CMS should more strongly encourage States to allow 
the purchase of these services, perhaps by providing some additional 
incentive for States to do so, financial or otherwise.
    Response: We agree with the commenter that transition costs can be 
crucial for an individual as it relates to being able to transition 
from an institution to the community. We also agree that many items 
that increase independence or substitute for human assistance have the 
potential to make a significant difference in an individual's life 
while also being cost-effective. We hope that the enhanced match 
included in CFC, and the potential for cost savings, will be an 
incentive to States to include permissible services and supports in 
their CFC programs. We are also revising the language in paragraph 
(b)(1) under Sec.  441.520 to reference a ``home and community-based 
setting'' rather than a ``community-based home setting.''
    Comment: One commenter suggested that expenditures related to 
transition costs should include funding for basic home modifications to 
expand the supply of physically accessible housing options. Such 
modifications to entrances or bathrooms, for example, could make an 
otherwise inaccessible unit accessible at a reasonable cost. This 
commenter also indicated that while the proposed rule states that 
individuals are not required to save an amount in a budget to purchase 
items that increase independence or substitute for human assistance, it 
should be made clear that individuals should not be pressured to 
purchase items if it would unduly reduce the hours of personal 
assistance in a manner that negatively impacts overall service needs.
    Response: At the State's option, and consistent with the statute, 
where a service is based on a need identified in the person-centered 
service plan, qualifying home modifications may be provided either as a 
transitional costs or as a way to increase an individual's independence 
or as a substitute for human assistance. We further address this in 
Sec.  441.525(e). We also agree that individuals should not be 
pressured to purchase any items if such purchases would reduce the 
number of hours of assistance in a manner that would negatively impact 
them.
    Comment: One commenter suggested that institutions other than 
nursing facilities, IMDs, or ICF-MRs should be included among the list 
of institutions from which individuals could transition, as often 
individuals with serious mental illness reside in smaller institutional 
settings such as adult homes or large group homes. The commenter 
indicates that these funds would be necessary for transitions from 
those settings. The commenter suggested that paragraph (b)(1) be 
amended to include ``adult homes for people with mental illness and 
group homes with over four residents.''
    Response: Section 1915(k)(1)(D)(i) of the Act sets forth 
requirements that expenditures for transition costs are available ``for 
an individual to make the transition from a nursing facility, and 
institution for mental diseases, or intermediate care facility for the 
mentally retarded.'' Therefore, we are not revising the regulation as 
suggested.
    Comment: One commenter asked if States can limit the CFC transition 
benefit to individuals not eligible for transition services under 
either section 1915(c) of the Act or Money Follows the Person (MFP) 
program. The commenter also asked whether the transition benefit can 
differ from what is already offered in the State through section 
1915(c) of the Act.
    Response: CFC services must be provided without regard to the 
individual's age, type, or nature of disability, severity of 
disability, or the form of home and community-based attendant services 
and supports the individual requires to lead an independent life. Thus, 
a State may not propose to provide a service to only to a subset of the 
population eligible for CFC services. We recognize there may be 
instances in which individuals are eligible for similar services under 
more than one Medicaid authority. As indicated in Sec.  441.510(e) 
individuals receiving CFC services will not be precluded from receiving 
other home and community-based long-term care services and supports 
through other waiver, State plan or grant authorities. To prevent 
duplication of the provision of services to the same individual, steps 
must be taken when developing the person- centered service plan, to 
prevent the provision of unnecessary or inappropriate care, as required 
at Sec.  441.540(b)(12).
    Comment: One commenter asked if States will need to contemplate and 
detail in the State plan amendment, all potential supports/services 
that may be allowed (presumably under permissible services) and whether 
or not States can define specific exclusions. Another commenter asked 
that CMS clarify whether permissible purchases are only available under 
the self-directed service model or if it applies to the agency model as 
well.
    Response: A State would not be required to detail each item they 
would allow under permissible services and supports. States will need 
to indicate in the State plan amendment electing CFC whether they will 
be offering such services and supports, and any limitations they 
propose to include. States will also be asked to identify whether they 
will include items that increase independence or substitute for human 
assistance as permissible services and supports. Permissible services 
and supports are available at the State's option regardless of service 
model.
    Comment: Several commenters strongly supported the first component 
of section 1915(k)(1)(D)(ii) of the Act that permits States to make 
expenditures available for individuals to acquire items that increase 
independence or substitute for human assistance and also supported the 
inclusion of this flexibility in the CFC proposed rule, but stated that 
the second component of this statement (``to the extent that 
expenditures would otherwise be made for human assistance and are 
related to a need identified in an individual's person-centered plan'') 
may actually lead to more restrictions than necessary. The commenters 
stated that the purchase of innovative goods and services may not 
replace human assistance, but rather make such assistance more 
effective (for example, the use of devices to support transferring 
individuals from their bed to a wheelchair) and suggested that 
addressing independence or substituting for human assistance is more 
appropriate. The commenters also stated that it is also important to 
recognize that some people who require CFC will not have the benefit of 
increasing independence, but rather may be successful at sustaining 
current functional ability or minimizing the restriction of 
independence that is occurring due to changes in health status and 
suggested that the CFC rule should be reflective of this reality.
    Response: We appreciate the points made in this comment and 
fundamentally agree with them. The language in the proposed regulation 
was taken directly from the authorizing legislation. However, we 
believe that ``increase independence or substitute for human 
assistance'' is sufficiently broad to encompass all the scenarios 
identified by the commenter. We do not interpret the term 
``substitute'' to mean only the total replacement of human assistance; 
therefore, the regulation would allow the purchase of items that just 
decrease the need for human assistance. We also agree that independence 
may be viewed to be ``increased'' by purchases aimed at preventing its 
decline.

[[Page 26847]]

    Comment: One commenter questioned including the same language at 
Sec.  441.520(b)(3) as in Sec.  441.525 regarding the potential for 
providing some otherwise excluded services if they are based on a need 
in the service plan, as the language in paragraph (b)(3) is broad when 
applied to all permissible services, and this language could put a 
difficult burden on consumers to identify all possible future support 
needs during the care assessment phase.
    Response: We do not anticipate a burden being placed on individuals 
to determine possible future needs during the functional need 
assessment or development of the person-centered plan. Both the 
assessment and the plan must be revised, as indicated in Sec.  
441.535(c) and Sec.  441.540(e), respectively, at least every 12 
months, when the individual's circumstances or needs change 
significantly, and at the request of the individual or the individual's 
representative. These protections are sufficient to address any future 
needs.
    Comment: One commenter asked specifically who coordinates the 
assessment and person-centered plan and whether there is a requirement 
that a separate Targeted Case Management service accomplish these 
tasks. The commenter also asked if these coordination services would be 
eligible for the enhanced match. Another commenter encouraged the 
addition of care coordination as a permissible service as this is 
essential for individuals with long-term care needs, and added that 
States may be more inclined to utilize CFC if this is a component that 
would also receive the enhanced FMAP.
    Response: Targeted Case Management is a Medicaid service separate 
and distinct from CFC. There is no Targeted Case Management requirement 
in CFC. States may choose to use Targeted Case Management to assist 
with coordination and linkage functions for individuals participating 
in CFC, as long as all Targeted Case Management requirements are met. 
While we agree that care coordination is a beneficial service component 
for individuals with long-term care needs, care coordination was not a 
component that was included in the CFC statute, and therefore, would 
not be eligible for the enhanced FMAP.
    Comment: One commenter indicated that States should be allowed to 
provide services in CFC that are currently allowable under section 
1915(c) waivers, such as home delivered meals, adult day services, and 
non medical transportation if these services are an identified need in 
the service plan, as these services allow seniors and those with 
disabilities to live as independently as possible in their own homes 
and communities.
    Response: States that choose to offer permissible services and 
supports have the option to provide for items that increase 
independence or substitute for human assistance, to the extent that 
expenditures would have been made for human assistance, as long as the 
item meets the requirements at Sec.  441.520(b).
    Upon consideration of public comments received, we are finalizing 
Sec.  441.520 with revision, changing the title of this section to 
``Included Services'', modifying paragraph (a)(1) to refer to ``* * * 
hands-on assistance, supervision, and/or cueing'', modifying paragraph 
(b) to indicate that items covered under transition costs must be 
linked to an assessed need and adding the phrase ``At the State's 
option'' to clarify that paragraphs (b)(1) and (2) that follow are both 
at the State's option, revising the language in paragraph (b)(1) to 
reference a ``home and community-based setting'' rather than a 
``community-based home setting.'' and removing paragraph (b)(3) and 
relocating the language to 441.520(b).

G. Excluded Services (Sec.  441.525)

    Consistent with section 1915(k)(1)(C) of the Act, we proposed to 
exclude the following services from CFC:
     Room and board costs for the individual, except for 
allowable transition services described in Sec.  441.520(b)(1) of this 
subpart.
     Special education and related services provided under the 
Individuals with Disabilities Education Act that are related to 
education only, and vocational rehabilitation services provided under 
the Rehabilitation Act of 1973.
     Assistive devices and assistive technology services other 
than those defined in Sec.  441.520(a)(3) of this subpart (incorrectly 
specified as Sec.  441.520(a)(5) in the proposed rule, which does not 
exist) or those that are based on a specific need identified in the 
service plan when used in conjunction with other home and community-
based attendant services.
     Medical supplies and equipment.
     Home modifications.
    Consistent with section 1915(k)(1)(D) of the Act, we proposed to 
allow certain otherwise excluded items if they related to an identified 
need in an individual's service plan that increase an individual's 
independence or substitute for human assistance, to the extent that 
expenditures would otherwise be made for the human assistance.
    Comment: One commenter noted that the rule required backup systems 
to be made available, but excluded assistive technology and assistive 
technology services.
    Response: We appreciate this commenter's perspective. The statute 
provides that the excluded services and supports are ``subject to 
subparagraph (D)'' which defines permissible services and supports to 
include expenditures relating to a need identified in an individual's 
person-centered service plan that increases independence or substitutes 
for human assistance. From our experience with Cash and Counseling 
demonstrations, section 1915(j) and 1915(c) authorities, we know that 
assistive technology devices and services often fall under the category 
of items that increase independence or substitute for human assistance. 
Therefore, we proposed in the rule that some items or services that 
could be classified as assistive technology devices or services could 
be covered, but only when based on a specific need in the person-
centered service plan. We are maintaining this flexibility in the final 
rule.
    Comment: Several commenters recommended that CMS include in the 
final regulation that Medicaid reimbursement for room and board for a 
personal attendant is an allowable expenditure as this is consistent 
with the SMD letter included with the section 1915(c) waiver guidance 
and CFC should be consistent with current CMS policy.
    Response: We appreciate the commenters' suggestion and acknowledge 
that section 1915(c)(1) of the Act indicates that excluded ``room and 
board'' costs shall not include amounts States may define as rent and 
food expenses for an unrelated personal caregiver residing in the same 
household with the individual. Such amounts are part of the cost of 
delivering the service; they are not room and board for the individual. 
No such clarification was included in the statute for section 1915(k) 
of the Act; it speaks only to excluded room and board costs ``for the 
individual.'' To continue efforts to align CMS policy across Medicaid 
authorities whenever appropriate, we agree with the commenter. Room and 
board costs attributable to an unrelated attendant residing in the same 
household would be considered appropriate for reimbursement as a CFC 
service, as these costs are part of service delivery for ``assistance 
in accomplishing ADLs, IADLs, and health-related tasks.''
    Comment: Multiple commenters stated that it is appropriate to pay 
for assistive technology, medical equipment, and home modifications

[[Page 26848]]

when coverage is based on an identified need in a service plan and used 
in conjunction with other home and community-based attendant services. 
One commenter added that the proposed regulation was in keeping with 
the intent of CFC to be primarily an attendant services benefit and 
indicated that it made sense to allow States to balance the use of 
these items in relation to attendant services. Multiple commenters 
supported the proposal to only exclude coverage of assistive devices, 
medical equipment, and home modifications in circumstances where they 
would be the sole needed service in an individual's service plan. 
Another commenter added that coverage of other services and supports 
encourages increased independence which is a key goal of person-
centered services and is cost effective. Multiple commenters commended 
the inclusion of the language referencing the exclusion of services 
``that are related to education only'' in paragraph (b). One commenter 
indicated that they understood the reasoning behind allowing some items 
that increase independence or substitute for human assistance, but were 
unclear how the requirement that they be used in conjunction with 
another CFC service furthered that goal, as there are many forms of 
assistive technology that, independent of all other services, can 
reduce dependency and substitute for human assistance.
    Response: We agree that it is appropriate to pay for items that 
increase independence and substitute for human assistance. However, 
after reviewing comments and further consideration of the statute, we 
do not believe it is necessary to require that such items must be used 
in conjunction with other home and community-based attendant services. 
Section 1915(k)(1)(C) of the Act indicates that excluded services are 
subject to subparagraph (D) which indicates that States may cover 
``expenditures relating to a need identified in an individual's person-
centered plan of services that increase independence or substitute for 
human assistance * * *'' There is no statutory requirement that these 
items be provided ``in conjunction with other home and community-based 
attendant services.'' We are concerned that maintaining this 
requirement could result in an individual not receiving needed 
services. Therefore, we are revising Sec.  441.525(c) to remove the 
requirement that assistive devices and assistive technology services 
meeting the requirements of Sec.  441.520(b)(2) have to be used in 
conjunction with other home and community-based attendant services.
    Comment: Several commenters urged CMS to ensure that the actual 
text of the regulation reflect the intent expressed by CMS to allow 
assistive technology, medical equipment, and home modifications when 
coverage is based on an identified need in the service plan.
    Response: We have revised Sec.  441.525(d) and (e) to clarify the 
treatment of medical supplies, medical equipment, and home 
modifications. We believe this flexibility for assistive technology 
devices and assistive technology services is already clear.
    Comment: Multiple commenters indicated that the preamble language 
on page 10740 of the proposed rule stating that CFC ``would not include 
services furnished through another benefit or section under the Act'' 
is overly broad and should be amended to read ``would not include 
certain specific types of services furnished through another benefit or 
section under the Act.''
    Response: The language in the preamble excluding services from CFC 
when furnished through another benefit or section under the Act was not 
included in the actual regulation text. Since section 1915(k) of the 
Act specifies the services that are available under the CFC State plan 
option, and such a prohibition was not specified in statute, we have 
decided to not include such a prohibition in the CFC regulation. As 
indicated earlier, steps must be taken when developing the person-
centered service plan to prevent the provision of unnecessary or 
inappropriate care, as required at Sec.  441.540(b)(12). To meet this 
requirement, we expect States to implement policies and procedures to 
prevent the duplication of services that may be available under more 
than one Medicaid benefit.
    Comment: One commenter indicated that the statute excludes 
assistive technology devices and services and acknowledged that the 
proposed rule noted that the statute does not define the terms, which 
could be read broadly to exclude devices or services allowed under 
sections 1915(k)(1)(D)(i) or (ii) of the Act. The commenter stated that 
because CMS only excludes devices and services that do not serve a 
specific need in the person-centered service plan, the implementation 
of this regulation may become too restrictive as advances in technology 
may be accommodated too slowly because individuals may have imperfect 
information on the devices and services that may suit their particular 
needs.
    Response: The statute is clear at section 1915(k)(1)(D)(ii) of the 
Act that these expenditures must be related ``to a need identified in 
an individual's person-centered plan of services.'' If advances in 
technology result in an item that would meet an individual's identified 
need, it would potentially be allowable as a permissible service or 
supports. Both the assessment and the service plan must be revised, as 
indicated in Sec.  441.535(c) and Sec.  441.540(e), respectively, at 
least every 12 months, when the individual's circumstances or needs 
change significantly, and at the request of the individual or the 
individual's representative. These protections are sufficient to 
address any future needs. It is also important to note that States have 
the flexibility to choose whether or not to provide for permissible 
services and supports as they are not a required service.
    Comment: One commenter asked CMS to clarify whether examples such 
as a walk-in shower to allow for a wheeled shower chair to be used for 
bathing, kitchen adjustments to permit someone with functional 
limitations to prepare his or her own meals, or moving a washer/dryer 
upstairs may qualify under such a definition. One commenter urged CMS 
to include additional examples of eligible assistive technology devices 
and services that could be included including medication management 
technology, home telecare/remote monitoring, and telehealth/
telemonitoring, as these may assist personal attendant and health-
related services under CFC in the future. Another commenter strongly 
supported inclusion of items such as environmental controls and 
telecare, stating that these could be very cost-effective and improve 
the independence of persons with disabilities as such technology or 
devices could reduce the need for human assistance. Other commenters 
provided additional examples of items that increase independence or 
substitute for human assistance such as adaptive utensils that allow a 
participant to eat meals and a voice activated system that allows a 
participant with quadriplegia to control various aspects of the home 
environment (lights, windows, door locks, etc.) and added that the 
exceptions to the excluded services as outlined in the proposed rule 
are of the utmost importance to glean the benefits of the Cash & 
Counseling model. Another commenter requested that CMS clarify the 
actual scope of services under this exception that could be provided.

[[Page 26849]]

    Response: We appreciate the commenters' requests for clarification 
and suggestions regarding what items may be allowable under permissible 
services and supports. We do not believe it is appropriate for CMS to 
define a finite list of items that can be provided as a service or 
support. As we noted above, the statute set forth that ``expenditures 
relating to a need identified in an individual's person-centered plan 
of services that increase independence or substitute for human 
assistance, to the extent that expenditures would other-wise be made 
for the human assistance'' are allowable as permissible services and 
supports. States have the choice to provide any of the permissible 
services and supports that meet the requirements at Sec.  441.520(b).
    Comment: Another commenter noted that the prohibition on home 
modifications seems extreme as access to keyless entries and accessible 
bathrooms are important to increase both access to affordable and 
accessible housing and quality of life. The commenter added that 
``Assistive Technology services'' seems too narrowly defined to address 
important supports such as bathroom modifications.
    Response: The term ``assistive technology services'' is taken 
directly from statute as an excluded service. Section 1915(k)(1)(C) of 
the Act indicates that excluded services are subject to subparagraph 
(D) which indicates that States may cover ``expenditures relating to a 
need identified in an individual's person-centered plan of services 
that increase independence or substitute for human assistance * * *.'' 
Therefore, we believe some services that would otherwise be excluded 
may be covered when related to an identified need for items that 
increase independence or substitute for human assistance.
    Comment: Several commenters supported CMS' proposal to provide for 
coverage of assistive devices in certain circumstances while at the 
same time promoting appropriate allocation of resources within the 
service plan and the program. The commenters noted that under the self-
directed service delivery model proposed for CFC, the State must 
approve a service budget or cap that meets specified requirements, 
including specifying a dollar amount that an individual may use for 
services and supports under the program. The commenters added that 
States must also satisfy criteria for the budget methodology that it 
employs including a process for describing any limits the State places 
on CFC services and supports and the basis for the limits. The 
commenters believe that these provisions work in concert with Sec.  
441.525(c) to provide a framework for coverage that is compatible with 
implementation of the required exclusion and recommended that CMS point 
out this linkage in the preamble to the final rule.
    Response: We appreciate comments but do not believe that it is 
necessary to point specifically to the linkage of these particular 
provisions in the final regulation.
    Comment: One commenter voiced concern that explicitly indicating 
that States may determine at what point the amount of funds to purchase 
such devices and adaptations places them in the statutorily excluded 
categories will lead to an unreasonable limitation on this category 
with an over-emphasis on cost rather than need and relation to the 
other home and community-based attendant services. Another commenter 
added that the regulation does not contain any language related to the 
proposal to allow States to determine the point at which the funding 
amount would place items into the statutorily excluded categories and 
is concerned that regulatory language might confuse the cost of the 
service with the type or purpose of the service and that States should 
not have absolute discretion to target exclusions strictly based on 
cost. One commenter suggested that there should be some annual spending 
limits on the more costly and technologically advanced of the available 
assistive technologies such as an annual monetary limit per individual. 
Another commenter recommended that there be guidelines for the States 
to determine the cost threshold which would place the services and 
modifications into the excluded categories. The commenter asked if this 
was a onetime expenditure measured against the cost savings from 
reducing human assistance over the period of a month/year, or multiple 
years. The commenter noted concern that if the State sets a cap on the 
amount of funding that can be used to purchase devices and adaptations, 
this could prevent people from getting those supports even if it 
increases independence and saves money over the long term.
    Response: As noted above, States have the choice to provide 
permissible services and supports. While we encourage States to allow 
for transition costs and for items that increase an individual's 
independence or substitute for human assistance, States have the 
flexibility to determine which, if any, permissible services and 
supports they will provide. All determinations regarding coverage of 
allowable items that meet the criteria in the final regulation, 
including the costs associated with the items, are the State's to make.
    We acknowledge that the preamble language regarding the proposal to 
allow States to determine the point at which the funding amount would 
place items into the statutorily excluded category did not carry over 
into the regulation. We are not incorporating this language into the 
final regulation, but we are clarifying here that States retain the 
ability to establish amount, duration and scope limitations relative to 
the provision of these items, as long as such limits are not prohibited 
by the statute, which among other requirements, specifies that they 
must not be based on the individual's age, type or nature of 
disability, severity of disability, or the form of home and community-
based attendant services and supports that the individual requires to 
lead an independent life.
    With regard to the costs measures and timeframes for the 
determination of cost savings related to the substitution for human 
assistance, we do not intend to set forth the methodology for 
determining this threshold as this is also at the State's discretion.
    Comment: One commenter interpreted the proposal to allow for 
coverage of assistive technology, equipment or home modifications when 
used in conjunction with other attendant services as integrated with 
the general principle that coverage under CFC is available only when 
there is no other coverage available under Medicaid or otherwise, and 
noted that at first impression, the proposal would seem to be 
inconsistent with section 1915(k)(1)(D) of the Act. The commenter 
stated that if this is not the case, it would be helpful if CMS could 
offer an estimate as to the potential cost of these services if 
included in the program.
    Response: The correlation between the commenter's interpretation 
and the request for a potential cost estimate is not clear. We note 
that there is nothing included in the final regulation that would make 
coverage under CFC available only when there is no other coverage 
available under Medicaid or otherwise. As noted earlier, we have also 
removed the requirement that these items must be used in conjunction 
with other home and community-based services.
    Comment: One commenter noted that medical equipment and home 
modifications are an essential component of any person-centered plan 
and that these items may assist a person in the transition from 
institutionalized

[[Page 26850]]

care to community care. The commenter questioned why they were listed 
as excluded services in the first place and recommended that they be 
added to the list of included services at Sec.  441.520.
    Response: These items were listed as excluded services in the 
statute at section 1915(k)(1)(C) of the Act, subject to section 
1915(k)(1)(D). We agree that these items may assist an individual in 
the transition from an institution into the community and we also 
believe that these items may also assist an individual choosing to 
remain in their own homes. As such, and consistent with section 
1915(k)(1)(D) of the Act, we proposed to allow States to cover such 
items as permissible services and supports long as the criteria 
described in Sec.  441.520(b)(1) or (b)(2) are met.
    Comment: Several commenters noted that while the exclusion of 
vocational rehabilitation services provided under the Rehabilitation 
Act of 1973 is well understood given its existence in other Medicaid 
programs, CMS and States should be reminded of the importance of 
allowing CFC participants to utilize their CFC services and supports 
within employment settings.
    Response: We agree that individuals requiring attendant services 
and supports should be allowed to receive those services as needed/
required in any home and community-based setting in which normal life 
activities take the individual, including the workplace.
    Comment: One commenter indicated that access to State vocational 
rehabilitation services is extremely limited for individuals with 
serious mental illness and recommended that services excluded from CFC 
should be limited to those services that vocational rehabilitation 
agencies are, in fact, paying for and not services for which they might 
pay, but are not providing to the specific individual. The commenter 
added that the regulation as written creates a ``catch-22'' for people 
with severe disabilities whom vocational rehabilitation agencies 
reject, and encouraged CMS to amend paragraph (b) to clarify that the 
intent is to prevent Medicaid paying for services already covered and 
paid for under vocational rehabilitation.
    Response: The statute specifically excludes vocational 
rehabilitation services (direct services to individuals with 
disabilities which teach specific skills required by an individual to 
perform tasks associated with performing a job to help them to become 
qualified for employment) from being provided under CFC. Therefore, we 
disagree with the suggestion to amend paragraph (b) as these services 
are not related to the services provided under CFC and should not 
impact vocational rehabilitation services being provided to an 
individual.
    Comment: A few commenters noted that the proposed rule indicates at 
Sec.  441.525 (c) that assistive technology devices and assistive 
technology services are excluded, other than those defined in Sec.  
441.520(a)(5), but pointed out that the proposed regulation does not 
include a Sec.  441.520(a)(5).
    Response: We have revised the regulation to reference Sec.  
441.520(a)(3).
    Upon consideration of public comments received, we are finalizing 
Sec.  441.525 with revision, modifying paragraph (c) to correct a 
reference to paragraph (a)(3) and to remove the requirement that 
assistive devices and assistive technology services meeting the 
requirements of Sec.  441.520(b)(2) have to be provided in conjunction 
with other home and community-based attendant services, and modifying 
paragraphs (d) and (e) to allow medical supplies, medical equipment and 
home modifications when coverage is based on an identified need in the 
service plan.

H. Setting (Sec.  441.530)

    We proposed that States must make available attendant services and 
supports in a home and community setting and specified that such 
settings did not include the following:
     A nursing facility;
     An institution for mental diseases;
     An intermediate care facility for the mentally retarded;
     Any settings located in a building that is also a publicly 
or privately operated facility that provides inpatient institutional 
treatment or custodial care; or
     A building on the grounds of or immediately adjacent to, a 
public institution or disability-specific housing complex, designed 
expressly around an individual's diagnosis that is geographically 
segregated from the larger community, as determined by the Secretary.
    We received multiple thoughtful comments related to this section of 
the proposed regulation. These comments provided a rich and varied 
array of perspectives for our consideration. Several commenters were 
supportive of CMS' efforts to add parameters regarding home and 
community-based settings and some were supportive of the proposed 
language. Several commenters were strongly supportive of the proposed 
setting exclusions specifically. Multiple commenters expressed their 
concerns related to the proposed regulation and offered suggestions for 
revision of the criteria. These comments are reflected as follows:
     One commenter indicated the need for a more specific 
definition of setting adding that facilitating residents' engagement 
with and participation in the community is an essential component of 
services provided in a home and community-based setting.
     One commenter noted that the ambiguity surrounding the 
definition of home and community-based desperately needed to be 
remedied.
     One commenter noted that CMS proposed to adopt the 
statutory definition at section 1915(k)(1)(A)(ii) of the Act and 
recommended that CMS rely on this definition for purposes of CFC.
     One commenter recommended that CMS continue exploring how 
to clarify that certain settings are ``outside of what would be 
considered home and community-based because they are not integrated 
into the community.'' The commenter suggested that CMS consider that 
such clarification could be process-based and service-based and explore 
which processes and services characterize integration. The commenter 
recommended that CMS ensure that any clarification of the definition 
does not eliminate important community-based options for Medicaid 
beneficiaries, including assisted living communities, group homes, and 
settings that happen to be located near institutional settings. The 
commenter also suggested that when a clarification is developed, CMS 
should initially limit the use to one HCBS program until it is 
determined that there are no unintended or unanticipated problems 
caused by the clarification. Another commenter requested we clarify if 
CFC services may be provided in other residential community-based 
settings such as Assisted Living Facilities. The commenter believes the 
criteria should ensure participant independence and choice in 
residential settings that meet the unique needs and preferences of each 
individual.
     Several commenters requested that CMS convene meetings of 
stakeholders to address the definition of home and community-based.
     Other commenters encouraged CMS to ensure that the 
regulation recognizes that some populations need and choose to reside 
in settings that are similar to assisted living, so that they can 
maximize their independent living while still being able to access 
support services to keep them healthy and safe, and that some people 
with disabilities with very particular functional limitations need to 
receive support

[[Page 26851]]

services in more structured environments.
     Another commenter added that any criteria for setting 
should allow individuals to access services that aim to integrate 
individuals into community life and that organizations that are 
accredited by a national accreditation group that meet standards for 
person-centered planning and community integration as established by 
the accrediting body for programs serving people with disabilities 
should be eligible providers.
     One commenter indicated that ``community'' is defined as a 
unified body of individuals; people with common interests living in a 
particular area; a fellowship; a social state or condition, and pointed 
out that a community is more than a place or a location, and is defined 
not just by where people live but how they interact. The commenter 
added that in many States the word ``inclusion'' means that adults with 
special needs live in isolated settings like group homes, separated by 
a radius of 1000 feet where there is little or no contact with 
neighbors but is nevertheless considered being in the community and 
thus ``included.'' The commenter stated that individuals and their 
families are the primary decision makers regarding where and with whom 
to live and that they should be able to choose where they want to be 
rather than where they are forced to be included. The commenter pointed 
out that the stated values of CMS include ``promoting initiative and 
choice in daily living,'' yet HCBS waiver funding would be denied to 
those who would benefit from the choice of residential options, and 
recommended that Medicaid waiver funding should be person-centered, 
choice based, consumer driven and the money should follow the person, 
not ``idealist ideology.'' Finally, the commenter stated that 
``inclusion'' must not exclude individuals with developmental 
disabilities from the rights afforded to all other citizens, including 
the right to live next to peers in a setting of choice.
     Another commenter indicated that as proposed, these 
exclusions, which they believe to be based on artificial 
considerations, might actually lead to greater isolation of 
individuals. The commenter indicated that despite the locations where 
some individuals reside, the sense of community there is much greater 
than the individual might have if they were living by themselves in an 
apartment with limited social opportunities, access to assistance and 
amenities, and vulnerable to exploitation. The commenter added that as 
written, this apartment would be considered ``integrated'' while a 
planned residential retirement community where individuals and their 
friends live alongside one another with access to services would not be 
considered a community setting.
     One commenter recommended a more robust set of standards 
to evaluate the ``quasi-institutional'' setting to determine whether 
they are to be excluded and suggested that these standards include 
whether the setting is segregated from the community at large, whether 
the residents are limited in terms of meal times, meal sources, and 
visitors, whether the setting limits the choice of caregivers, whether 
the setting controls or limits the resident's abode in terms of normal 
actions as furniture, food storage, paint colors, and use of TVs etc., 
and whether the facility has any contractual or other obligation to 
provide personal care to residents.
     One commenter indicated that there is a limited supply of 
affordable, handicap accessible housing that is available for low 
income individuals and that establishing a strict definition of 
settings could have a negative impact on access to CFC.
     Several commenters voiced concern regarding whether 
services will still be authorized in settings if these proposed 
criteria are adopted broadly across Medicaid. One commenter indicated 
that their organization serves frail elderly individuals, most of whom 
are Medicaid beneficiaries, on a campus that includes 6 buildings (1 
with 20 nursing care beds, 1 with 16 memory care beds, 3 assisted 
living buildings, and one building of independent living with 12 
apartments). The commenter added that the nursing care beds are the 
only nursing beds in the entire county and they were moved to this 
location when the rural critical access hospital closed down due to 
funding issues. The commenter voiced concern as they have been involved 
with the waiver program since its inception and as written, these 
exclusions would have a negative impact on the lives of many elderly 
individuals currently being served.
     One commenter requested that CMS regulations and State 
Plan Amendments assure that a State's decision to access CFC does not 
adversely impact assisted living settings for American Indians and 
Alaska Natives (AI/AN) individuals who reside in/near Indian 
communities where living settings may differ according to the cultural 
norms of those communities. The commenter indicated that certain 
assisted living settings, even though they may be large congregate 
settings, should be considered appropriate home and 
community[hyphen]based settings under certain conditions. The commenter 
recommended that the regulation affirmatively state that those 
culturally appropriate settings in/near Indian communities, including 
assisted living settings for persons of retirement age, without regard 
to disability, where the individual is to be served is an Indian or 
resides in/near an Indian community where group living arrangements are 
culturally acceptable, are not excluded from home and 
community[hyphen]based settings.
     One commenter suggested that CMS had not gone far enough 
to assure that settings are truly community-based, stating that the 
language only lists three types of institutions, and proposed language, 
similar to that used in the Money Follows the Person (MFP) program, 
that provides an exclusion that they felt would capture an 
institutional setting regardless of its licensure category. Other 
commenters suggested using the definition of ``community housing'' 
developed for the MFP program to clarify whether and what type of 
Assisted Living Facility will or will not be allowed as a setting under 
CFC. Several other commenters suggested using the 2011 MFP application 
definition of ``qualified residence'' and one commenter added that this 
would prevent HCBS dollars from being used to house people on 
congregate campuses. Another commenter suggested further clarifying the 
community nature of the setting where services may be provided to 
ensure that States are not using this option to further entrench 
institutional placements in the State and suggested defining 
``community setting'' in the definition section using guidelines 
similar to those used in MFP: A home owned or leased by the recipient 
or that individual's family; a residence in a community-based 
residential setting in which no more than four unrelated individuals 
reside; or assisted living facilities or settings that offer a lease, 
as long as those residences include living, sleeping, bathing and 
cooking areas, offer residents lockable access and egress and cannot 
require that services be provided as a condition of tenancy or from a 
specific company. One commenter indicated that ``inpatient 
institutional treatment'', ``custodial care'' and ``provides'' were not 
defined in the proposed regulations and added that it is important that 
CMS clarify the meaning of these terms, as how they are defined could 
have a significant impact on the settings where individuals may receive 
CFC services. The commenter also pointed out the definition of 
custodial care in the Medicare Benefit

[[Page 26852]]

Policy Manual and added that some of the services offered under CFC are 
these same services. Another commenter asked if individuals who live in 
any building that provides custodial care by the Federal definition 
would be precluded from receiving services under CFC.
     One commenter asked what was meant by using the phrase 
``publicly or privately operated facility that provides custodial 
care'' while several commenters voiced concern that the reference in 
subparagraph (d) to ``custodial care'', depending on how it is defined, 
could preclude individuals who live in any building that provides 
assistance with activities of daily living from receiving CFC. Another 
commenter indicated that depending how terms in both paragraphs (d) and 
(e) are defined and interpreted, the current proposed language could 
prevent the provision of CFC services in any residential setting where 
personal care is provided other than an individual's own private home. 
One commenter added that States have innovative housing with services 
models of care that promote consumer choice for home and community-
based services and that at times, HUD funded section 202 and 811 
housing are located on the same campus as a nursing home. The commenter 
stated that many times these programs provide ``custodial care'' to 
help older individuals and persons with disabilities age in place. The 
commenter also stated that as part of their rebalancing efforts, some 
States are encouraging nursing homes to decertify beds and establish 
independent living for older individuals and persons with disabilities 
and because this independent living is located in a nursing home, the 
consumers would not be eligible for CFC, even though their residences 
are currently considered independent living. The commenter indicated 
that the definition of setting in the proposed rule for CFC could be a 
barrier in many States where older frail individuals with chronic 
diseases and persons with disabilities choose to live in the least 
restrictive setting in their community that offer the services that 
they need to remain independent.
     Another commenter added that if efforts are made to 
dismantle settings that would now be excluded, that people with 
disabilities in congregate housing complexes ``in the community'' be 
provided with ample phasing-in time or consider grandfathering- in 
settings for people who do not wish to move to continue receiving their 
services as people should not have to choose between housing and 
supports.
     One commenter indicated that individuals receiving self-
directed services generally must live in a setting that is not provider 
owned and operated and asked if such settings are excluded under the 
CFC program as it is not clear.
     One commenter indicated that denying access to CFC funds 
for an individual who resides ``in a building on the grounds of, or 
immediately adjacent to, a public institution or disability-specific 
housing complex'' does not reflect the purpose of section 1915(k) of 
the Act, which is to improve access to personal attendant services, and 
other services required under Sec.  441.520 for individuals in the 
community. The commenter added that there was no statement in the 
Olmstead ruling that required that the setting for care delivery cannot 
be located in a building on the grounds of, or immediately adjacent to, 
a public institution or disability-specific housing complex. One 
commenter suggested that terms in paragraph (e) like ``disability 
specific housing complex'' be clarified while another suggested that it 
be removed altogether as individuals living in these settings are 
currently eligible to receive home and community-based services and 
supports. One commenter requested that community-based settings not be 
excluded based on proximity to congregate care or the fact that they 
only serve individuals with disabilities as community integration is a 
large part of their programs.
     Several commenters voiced concern about the definition 
excluding those settings that are geographically segregated from the 
community and urged that size alone not become part of the definition. 
The commenter indicated that small campus settings can provide rich 
staffing and supervision and a continuum of care model needed for 
individuals with traumatic brain injuries etc. Another commenter 
expressed concern that the proposed definition of home and community-
based setting might exclude important options for services that assist 
people with disabilities, especially cognitive disabilities related to 
severe brain injuries, to live in and be part of the community. 
Specifically, the commenter is concerned that services could be denied 
to individuals currently receiving Medicaid benefits from post-acute 
brain injury rehabilitation service programs that are enrolled in 
Medicaid and other State programs serving people with brain injury. 
Another commenter with a family member in a facility for individuals 
with traumatic brain injury stated that this setting was much better 
for her daughter than a nursing home and that she is part of community 
there.
     Other commenters indicated that some companies have 
various settings ranging from a campus to group homes and apartments 
and individuals as well as families and guardians choose these 
settings. Another commenter suggested that rather than including 
geographical segregation when setting a standard, CMS should impose a 
standard for community integration that is applied to service plans, 
including access and involvement in the community and the level of 
social interaction in the residence of the individual.
     One commenter voiced concern about the tension between the 
need for affordable, accessible housing for people with developmental 
disabilities (including HUD's section 811 and 202 housing programs) and 
the need for that housing to be provided in integrated settings rather 
than clustered or segregated housing that primarily or exclusively 
serves people with disabilities. Other commenters shared concerns that 
housing used by the elderly and individuals with disabilities as 
allowed by the Senior Housing Exemption to the Fair Housing Act and 
under HUD's subsidized apartments (811 and 202 housing programs) would 
be restricted by the phrase ``disability specific housing segregated 
from the larger community'' and recommended that these settings be 
allowed. Another commenter questioned what type of setting this 
language intended to address and voiced concern that individuals in 
these 811 and 202 housing programs might be affected or lose services. 
Several commenters expressed concern that the proposed definitions 
would exclude the delivery of attendant services in many settings that 
are the most appropriate setting to an individual's needs, especially 
those residing in HUD funded section 811 and 202 housing designated 
specifically for targeted populations with disabilities.
     Another commenter added that to exclude certain settings 
goes beyond the Congressional intent of the CFC option as the Congress 
only excluded CFC in particular settings and urged CMS to remove the 
reference to disability-specific housing in this section.
     One commenter indicated that some individuals need and 
choose to receive services in ICFs/MR and the provision of a range of 
service options is supported by Federal law including Medicaid and the 
U.S. Supreme Court (Olmstead).
     One commenter requested that in addition to excluding 
settings that are co-located with current institutions that CMS also 
exclude settings created on the grounds of former institutions as it 
should be clear that the reorganization and reclassification of an 
institution

[[Page 26853]]

would not meet the criteria of a community-based setting.
     Another commenter added that CMS should clarify instances 
where paragraph (e) would not apply. One commenter referred to this 
proposed rule as providing clarifications of setting at Sec.  441.530 
with the purpose of disallowing HCBS Waiver funding for living 
arrangements in ``alternative or subsidiary residential settings on the 
ground of or located adjacent to such institutional facilities'' and 
recommended language revisions. The commenter appreciates explicit 
clarification that would prevent the practice of reconfiguring 
institutions to access funds not intended for institutional settings.
     One commenter indicated that community-based care settings 
like adult foster care, assisted living and residential care should 
qualify as a permitted setting under CFC.
     One commenter indicated that the preamble of the Home and 
Community-Based Services Waivers proposed rule published in the April 
15, 2011 Federal Register (76 FR 21311), listed 8 conditions for an 
assisted living home to be included as a community setting. The 
commenter stated that, with the exception of aging in place, the 
conditions are common to, and actually regulated for the licensing of 
assisted living homes in their State. The commenter stated that the 
view that assisted living is not part of the larger community is due to 
lack of experience with it and recommended that the emphasis be on the 
character of a building inside the walls rather than the location or 
foundation within the larger community or sharing grounds or walls with 
a nursing facility.
     Many commenters expressed concern that the definitions of 
setting would exclude assisted living facilities and other specific 
settings that they felt should be settings in which individuals could 
receive CFC services. Many commenters noted that individuals often 
choose to reside in these settings and continue to be part of the 
community rather than moving into a nursing facility.
     Several commenters indicated that any definition of home 
and community-based service settings applied across the Medicaid 
program should include assisted living facilities as well as group 
homes, disability-specific and non-institutional settings providing 
services to individuals and encouraged CMS to recognize the need for 
some populations to reside in settings that are similar to assisted 
living to maximize independence while at the same accessing support 
services to keep them healthy and safe.
     Several commenters recommended the following criteria be 
added to the section for a setting to be considered community-based:
    ++ The Unit/room must be a specific place that can be owned or 
rented and include the same protections from eviction under the State's 
landlord/tenant law;
    ++ The individual must have privacy in the unit (lockable entrance 
doors, freedom to furnish and share the unit only by choice, the 
inclusion of individual bathroom), unless partners/spouses share a 
room);
    ++ There is freedom/support to control one's own schedules and 
activities including access to food at any time; and
    ++ The individual may have visitors of their choosing at any time.
     One commenter proposed adding the following language to 
the list of excluded characteristics:
    ++ Any residence that requires that services must be provided as a 
condition of tenancy;
    ++ Any setting that requires notification of absence from the 
facility;
    ++ Any setting that does not have lockable access and egress 
controlled by the individual; and
    ++ Any residence where the lease reserves the right to assign 
apartments or change apartment assignments.
     One commenter indicated that the new proposed rule seems 
vague and seems to give the Secretary great latitude in describing what 
kind of setting is ``geographically segregated'' from the larger 
community (and therefore ineligible for waiver reimbursement for brain 
injury services). The commenter indicated that they support the freedom 
of consumers' choice and the option to live in a setting where 
community integration is maximized. The commenter does not support any 
definition that uses size of a home or the adjacency of homes on a 
small ``campus'' as the criteria for defining ``geographic 
segregation.'' The commenter added that in terms of small campus 
settings for individuals who are catastrophically injured and severely 
limited cognitively and physically and who require a good deal of 
medical oversight, this kind of living arrangement may provide the 
necessary richness of staffing to facilitate, rather than inhibit 
community integration to the highest degree possible for particular 
individuals. The commenter stated that while home size can matter, one 
size does not fit all, especially where the results from brain injury 
are profound for the consumer. Finally, this commenter urged the 
inclusion of the following specific criteria, other than simply size of 
the home, in the definition of settings:
    ++ The facility provides post-acute residential care to individuals 
with an acquired brain injury.
    ++ The facility is accredited by the Commission on Accreditation of 
Rehabilitation Facilities(CARF) as a community integrated brain injury 
rehabilitation facility.
    ++ There is handicap access to the community. (One example would be 
an accessible wheelchair path).
    ++ There is evidence of a robust level of community participation 
on the part of individuals living in the homes. (The commenter noted 
that one significant measure of the levels of community participation 
can be highlighted by applying the Maya-Portland inventory; the 
internationally recognized, standardized assessment in brain injury 
populations). Other evidence of such community participation may be 
access to jobs in the community, recreational outings, participation in 
community programs and prolific voting in local and national elections 
etc.
    ++ There is consideration given to the functional level of the 
people living in that home. For some individuals with profound 
limitations due to brain injury, a small campus in close proximity to a 
town or urban center is frequently the most effective way to provide 
the intensity of staffing, medical oversight, and richness of 
rehabilitation services that will enable people living in the home to 
access the social capital of community life.
    ++ There is a continuum of care available at the facility, so that 
as individuals gain functionally and can negotiate the community more 
safely, they can move from small campus settings in the community to 
even smaller group homes and independent apartments.
    ++ There is evidence of consumer choice in selection of the 
residential setting.
    ++ The home is not on the grounds of a hospital, nursing home or 
ICF.
     Several commenters strongly disagree with CMS' proposed 
clarifications and stated that proximity of a community setting to an 
institutional setting or disability-specific housing complex has 
little, if any, bearing on the degree of community integration 
experienced by residents. The commenters added that geographic 
separation should not matter if a residence is well integrated with the 
larger community. They believe that a better way to clarify community 
integration would be to look at the

[[Page 26854]]

services available and provided by the setting and to ensure that 
processes, such as care planning, promote beneficiary choice. The 
commenters stated that because all States license or certify assisted 
living providers, Medicaid beneficiaries living in these communities 
receive services with greater government oversight than those receiving 
services in freestanding homes. The commenters also added that in 
recent years, as residents' levels of disability and the proportion of 
residents with Alzheimer's and other related diseases have increased, 
States have responded by increasing regulatory standards applying to 
assisted living communities and that due in part to the fact that 
Medicaid cannot pay for room and board in community-based settings, the 
extent of Medicaid coverage in assisted living already is much more 
limited than Medicaid coverage for nursing homes and other long term 
care options. The commenters urged CMS to reconsider its clarification 
of ``home and community-based'' and recommended that CMS utilize the 
definition in law and explore a clarification that relies on services 
available and provided by the setting, and ensure that processes, such 
as care planning, promote choice.
     One commenter suggested that consideration be given to 
including the list of factors characterizing settings included in the 
recently proposed rule revising section 1915(c) HCBS waiver provisions 
published in the April 15, 2011 Federal Register. The commenter shared 
language from Sec.  441.301(b)(1)(iv) that states that attendant 
services may be provided ``only in settings that are home and 
community-based, integrated in the community, provide meaningful access 
to the community and community activities, and choice about providers, 
individuals with whom to interact, and daily life activities.''
    Response: We appreciate these thoughtful comments. Several 
commenters referenced waivers in their comments and we would like to 
clarify that this regulation pertains to the CFC State plan option, not 
the HCBS waiver program.
    In consideration of the comments received, we are not finalizing 
the setting provisions of proposed Sec.  441.530 at this time. The 
comments received indicated to us that the proposed provisions caused 
more confusion and disagreement than clarity and we believe further 
discussion and consideration on this issue is necessary. In addition, 
similar language proposed in the notice of proposed rulemaking for 
revisions to the 1915(c) waiver program garnered significant public 
comment. Therefore, we intend 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. We plan to propose home and community-based settings shall 
have all of the following qualities, and such other qualities as the 
Secretary determines to be appropriate, based on the needs of the 
individual as indicated in their person-centered service plan:
     The setting is integrated in, and facilitates the 
individual's full access to, the greater community, including 
opportunities to seek employment and work in competitive integrated 
settings, engage in community life, control personal resources, and 
receive services in the community, in the same manner as individuals 
without disabilities;
     The setting is selected by the individual from among all 
available alternatives and is identified in the person-centered service 
plan;
     An individual's essential personal rights of privacy, 
dignity and respect, and freedom from coercion and restraint are 
protected;
     Individual initiative, autonomy, and independence in 
making life choices, including but not limited to, daily activities, 
physical environment, and with whom to interact are optimized and not 
regimented;
     Individual choice regarding services and supports, and who 
provides them, is facilitated;
     In a provider-owned or controlled residential setting, the 
following additional conditions must be met. Any modification of the 
conditions, for example, to address the safety needs of an individual 
with dementia, must be supported by a specific assessed need and 
documented in the person-centered service plan:
    ++ The unit or room is a specific physical place that can be owned, 
rented or occupied under another legally enforceable agreement by the 
individual receiving services, and the individual has, at a minimum, 
the same responsibilities and protections from eviction that tenants 
have under the landlord tenant law of the State, county, city or other 
designated entity;
    ++ Each individual has privacy in their sleeping or living unit:

--Units have lockable entrance doors, with appropriate staff having 
keys to doors;
--Individuals share units only at the individual's choice; and
--Individuals have the freedom to furnish and decorate their sleeping 
or living units;

    ++ Individuals have the freedom and support to control their own 
schedules and activities, and have access to food at any time;
    ++ Individuals are able to have visitors of their choosing at any 
time; and
    ++ The setting is physically accessible to the individual.
    We also plan to propose that home and community-based settings do 
not include the following:
    (1) A nursing facility;
    (2) An institution for mental diseases;
    (3) An intermediate care facility for the mentally retarded;
    (4) A hospital providing long-term care services; or
    (5) Any other locations that have qualities of an institutional 
setting, as determined by the Secretary. The Secretary will apply a 
rebuttable presumption that a setting is not a home and community-based 
setting, and engage in heightened scrutiny, for any setting that is 
located in a building that is also a publicly or privately operated 
facility that provides inpatient institutional treatment in a building 
on the grounds of, or immediately adjacent to, a public institution or 
disability-specific housing complex. CMS will engage States in 
discussion and review any pertinent information submitted during the 
SPA review process to determine if these facilities meet the HCBS 
qualities set forth in the proposed rule.
    While we are proposing the aforementioned setting requirements in a 
new proposed rule, the CFC option is in full effect. CMS 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. To the 
extent there are changes when this language is finalized, we are 
committed to permitting States with an approved section 1915(k) State 
plan amendment a reasonable transition period, at a minimum of one 
year, to make any needed program changes to come into compliance with 
the final setting requirements. We are committed to minimizing 
disruption to State systems that have been established based upon 
compliance with these proposed regulations.
    It is our intent to and to apply this criteria to sections 1915(c) 
and 1915(i) of the Act authorities.
    As expressed earlier, we believe further discussion is necessary 
and we believe this can be accomplished by soliciting public comments 
on the modified criteria. Therefore, we are not finalizing the setting 
provision at this time.

[[Page 26855]]

I. Assessment of Need (Sec.  441.535)

    We proposed that States must conduct a face-to-face assessment of 
the individual's needs, strengths and preferences that supports the 
determination that an individual requires attendant services and 
supports available under CFC, as well as the development of a person-
centered service plan and, if applicable, a service budget. We also 
proposed that this assessment must be conducted at least every 12 
months, as needed when the individual's support needs or circumstances 
change significantly, necessitating revisions to the service plan, or 
at the request of the individual, or the individual's representative, 
as applicable.
    Comment: One commenter indicated support for this section and 
appreciated the emphasis on understanding and honoring an individual's 
personal goals and preferences for the provision of services.
    Response: We believe that an individual's preferences and goals for 
the provision of services is an important aspect of both an assessment 
and the person-centered service plan.
    Comment: Several commenters indicated that it is unclear whether 
the term ``may'' in Sec.  441.535(a) makes the entire subpart optional 
and suggested that CMS clarify that States must gather information on 
all the items listed in the proposed rule at paragraphs (a)(1) through 
(8). The commenters also indicated that it is unclear what role the 
consumer has in selecting (or prohibiting) the use of specific 
processes and techniques used to obtain information about an 
individual, and pointed out that the list of items included in 
paragraph (a) does not clearly correspond to ``processes and 
techniques.'' The commenters suggested that CMS change ``processes and 
techniques'' to ``criteria'' and recommended that certain criteria be 
mandatory to assure that the assessment is based on a comprehensive 
information set. The commenters recommended that the other criteria 
should be optional, but in all cases should not exceed the scope of the 
conversation with the individual, adding that collateral contacts 
should not be allowed unless requested by the individual. Finally, the 
commenters recommended that ``health condition'' at Sec.  441.535(a)(1) 
be expanded to read ``health condition and treatments'', and that 
``household'' at Sec.  441.535(a)(7) be edited to read, ``household and 
physical living arrangements, including the safety of those 
arrangements'' as ``household'' may be relevant to understanding the 
individual's functional limitation, but should not be a basis for 
lowering a needs determination based on availability of other people. 
One commenter requested that CMS amend Sec.  441.535(a)(1) to read 
``health and mental health condition.''
    Response: With regard to the ``processes and techniques'' to gather 
information for the assessment, the intent of this language was to 
indicate that States have the flexibility to utilize multiple methods 
to gather this information. Therefore, we do not agree with the 
commenters' suggestion to modify this language. With regard to the 
individual's role in the processes or techniques the State chooses to 
utilize, an individual should have the opportunity to discuss any 
gathered or related information during the assessment, and the 
individual must approve the person-centered service plan which is based 
on the assessment of need.
    In the absence of other statutory requirements, we proposed 
language in the assessment section for CFC that was consistent with the 
section 1915(j) Self-Directed Personal Attendant Services final rule, 
in an effort to streamline State requirements where possible across the 
programs. In addition, we indicated in the preamble that we are 
currently working to determine universal core elements to include in an 
assessment for consistency across programs. This initiative is directly 
related to the work being done regarding the Balancing Incentives 
Payment Program (Balancing Incentive Program) created under section 
10202 of the Affordable Care Act.
    Based on multiple comments and the acknowledgement that additional 
policy work is necessary to maximize the extent to which consistency 
can exist across the Medicaid programs as it relates to assessments for 
HCBS programs, we are revising the language, as some commenters 
suggested, to reflect the broad assessment requirements in statute. As 
such, we are reflecting this assessment throughout the final rule as 
the ``assessment of functional need.'' We are also taking more time to 
consider all of the thoughtful comments from this rule and the 
forthcoming comments from the proposed rule that will be published to 
implement changes to the section 1915(i) HCBS State Plan option 
required by the Affordable Care Act, and to have additional policy 
discussions both internally and with stakeholders. Our intent is to 
share any finalized universal core elements that are developed under 
the Balancing Incentive Program with States to use as examples of 
elements to be incorporated into the assessment of functional need for 
CFC and other HCBS assessments as determined by CMS. As such we are 
revising the language to add that the assessment must include other 
requirements as determined by the Secretary. Finally, we are clarifying 
the scope of the assessment to indicate that it is the individual's 
need for the services and supports provided under CFC that must be 
assessed. This is in no way meant to limit a State from implementing a 
comprehensive assessment that would determine an individual's need for 
a broader scope of services. We are simply clarifying in this rule that 
the assessment described at Sec.  441.535 is only required to assess 
the need for CFC services and supports.
    Comment: One commenter stated that the proposed regulation does not 
recognize that there may be other services and programs that can meet 
the needs of those applying for CFC and indicated that a comprehensive 
assessment should include a determination as to whether the individual 
is appropriate for this and other State plan and/or home and community-
based services so that the consumer can be offered a choice of programs 
and not be limited to one model of care. The commenter added that such 
an assessment tool is recognized as a vital component of other Federal 
programs including the State Balancing Incentive Program and is used by 
some States.
    Response: We agree with the commenter that it would be ideal for a 
State to have one comprehensive streamlined assessment for an 
individual that would serve to inform a person-centered service plan, 
and that the entity that coordinates and/or conducts these functions be 
able to present an array of possible services and supports to meet the 
individual's needs to provide a choice among these services to the 
individual. States have the flexibility to offer this kind of 
assessment and service plan and as the commenter pointed out, some 
States have implemented their programs in this manner.
    Comment: One commenter appreciated that CMS decided not to 
prescribe a specific assessment tool to determine an individual's 
functional needs. Another commenter pointed out that the preamble 
clearly states that CMS will not dictate the assessment tool and asked 
that CMS clarify in the rule that States may design and/or select the 
assessment tool to determine functional eligibility, as well as 
identify needed services as long as such tools contain the required CMS 
elements. Another commenter asked CMS to clarify

[[Page 26856]]

expectations about the face-to-face assessment process and instrument 
proposed for use in CFC, the more universal level of care assessment 
and service planning process, and instruments used in a State's section 
HCBS 1915(c) waiver programs. The commenter asked if there is 
flexibility for a State to use the same fundamental processes and 
instruments but with different threshold levels for program 
participation or if a State may choose different processes and 
instruments. The commenter also asked if States may set an assessment 
standard to operationalize the determination that an individual 
requires CFC. One commenter asked if States were expected to develop 
new assessment tools or if they can use existing assessment tools that 
establish level of care and service planning if the current tools 
conform to the requirements in the CFC regulation. The commenter added 
that States should be permitted to use assessment processes and person-
centered service planning to allow individualized determinations of the 
most integrated setting appropriate to the individual's needs and 
preferences, as well as eligibility for this option. Other commenters 
asked if States will have flexibility in selecting an assessment 
instrument and if the instrument could focus on specific types of 
disabilities (physical, intellectual, developmental, etc.).
    Response: We have not specified the instruments or techniques that 
should be used to secure the information necessary to determine an 
individual's functional need for the attendant services and supports 
offered under CFC or to develop the service plan and/or service budget. 
States continue to have the flexibility to develop their own assessment 
tools or to utilize existing tools to the extent possible to meet the 
requirements under CFC. While this regulation does not specifically 
address the assessment process or tool States utilize in their section 
1915(c) programs for assessments or level of care determinations, 
States have the flexibility to use any existing assessment tools if the 
CFC requirements are met. As States are not permitted to target 
attendant services and supports provided under CFC to any particular 
population or disability, we do not anticipate States will tailor an 
assessment of need to focus on any such population or disability.
    Comment: One commenter indicated that the most important aspect of 
legislative intent that is not captured in the proposed rule is a clear 
statement of a State obligation to provide services and supports to 
meet the individuals' assessed needs. The commenter suggested that 
language be added to paragraph (a) to say ``so as to meet the 
individual's assessed needs'' and recommended that this language be 
included elsewhere in the regulation as needed to ensure that a State 
has to meet the assessed needs of the individuals to receive funding.
    Response: An individual's person-centered service plan must be 
based on that individual's assessment of functional need. We expect 
that as needs for the required attendant services and supports 
available under CFC are identified and incorporated into the person-
centered service plan, these services would be made available to the 
individual to meet those needs. Therefore, we disagree with the 
suggestion to add this proposed language as we believe this expectation 
is clear. In fact, we do reiterate the ability of a State to establish 
limits on the amount, duration and scope of CFC services, as long as 
those limits are not based on the individual's age, type or nature of 
disability, severity of disability, or the form of home and community-
based attendant services and supports that the individual requires to 
lead an independent life, as prohibited in the statute.
    Comment: One commenter voiced concern that States might ``poorly 
integrate'' the CFC assessment into their current assessment processes 
for HCBS and suggested, along with another commenter, that States be 
required to have a publicly available written plan explaining how the 
CFC assessment will work, interact with existing assessments for HCBS, 
and ensure that the regulatory requirements are met.
    Response: States have the flexibility to design a new assessment 
tool, or utilize current assessment tools as long as the requirements 
in the CFC regulation are met. We do not agree with the commenter's 
recommendation to require States to have a written plan regarding their 
assessment, as we do not require a CFC-specific assessment. States 
electing CFC must submit a State plan amendment that shows how they 
propose to implement CFC and how the program requirements will be met. 
Once approved, this will become part of a State's Medicaid plan, which 
is a public document.
    Comment: One commenter recommended that CMS consider adding the 
concept of an independent assessment found in section 1915(i) of the 
Act and suggested that CMS add an independent assessment descriptor to 
Sec.  441.535. The commenter indicated that in paragraph (b), an 
independent assessment would also address concern about recipients 
needing the service, as an objective assessment would establish medical 
necessity for the services.
    Response: We agree that consideration should be given to the 
proposed requirements of the assessment for the section 1915(i) State 
plan option. As noted above, in addition to the comments received for 
this proposed rule, we will be considering the forthcoming section 
1915(i) proposed rule public comments related to assessments as we move 
forward with the development of the universal core assessment elements 
and methods to streamline requirements across the Medicaid program.
    Comment: One commenter pointed out that CMS states in the preamble 
that ``the assessment should include a determination of whether there 
are any persons available to support the individual, including family 
members. These persons may be able to provide unpaid personal 
assistance * * *'' and added that inclusion of such language in the 
preamble implies that CFC includes a waiver of comparability as found 
at section 1915(j)(3) of the Act. The commenter indicated that they 
have not identified a corresponding provision in section 2401 of the 
Affordable Care Act or in the proposed section 1915(k) rule and 
requested that CMS clarify whether such a waiver of comparability is 
intended and add language authorizing such a waiver.
    Response: We can confirm that no waiver of comparability was 
included in the authorizing legislation, or in the implementing 
regulation for CFC. However, we do not believe that comparability of 
services is violated based on an individualized determination of the 
impact of available unpaid personal assistance on the CFC services and 
supports required.
    Comment: One commenter indicated that the preamble mentions the 
identification of natural supports but the proposed rule related to 
assessment does not. The commenter recommended that if CMS mentions 
natural supports in the rule that we specify that the assessment and 
service plan take into account, but do not compel, natural supports, as 
case managers or other entities conducting the assessment and/or 
planning process should not automatically make judgments about what 
families ought to provide and reduce needed services accordingly.
    Response: We mention the identification of natural supports in the 
assessment preamble section as understanding an individual's natural 
supports is an important aspect in determining an individual's needs. 
It is a requirement in the person-centered

[[Page 26857]]

service plan that these supports be reflected in the person-centered 
service plan. We expect that identification of these natural, unpaid 
supports be taken into consideration with the purpose of understanding 
the level of support an individual has, and should not be used to 
reduce the level of services provided to an individual unless these 
unpaid supports are provided voluntarily to the individual. We have 
incorporated this philosophy into the ``Person-Centered Service Plan'' 
section, as discussed below.
    Comment: A few commenters indicated that they did not understand 
the purpose of paragraph (b) which states that ``assessment information 
supports the determination that an individual requires CFC * * *'' and 
suggested clarification or deletion. One commenter requested that in 
paragraph (b) CMS substitute the word ``requires'' with the words 
``would benefit from'' CFC services.
    Response: Information gathered in the assessment should support the 
determination that an individual requires the services and supports 
available under CFC. If an individual does not meet the State's medical 
necessity criteria for the receipt of attendant services and supports, 
the individual would not participate in the option. Therefore, we do 
not agree with the suggested language change.
    Comment: One commenter voiced concern that the proposed rule does 
not address the gap between the actual support needs of individuals and 
the needs typically assessed in current assessment tools which are 
generally limited to ADLs and IADLs.
    Response: While we appreciate the commenter's concern, CFC is a 
benefit to provide attendant services and supports to individuals to 
assist in accomplishing ADLs and IADLs. While States are not limited to 
assessing an individual's needs based solely on ADLs and IADLs, CFC as 
a benefit is centered around these services and supports.
    Comment: Several commenters referenced and supported the 
requirement at Sec.  441.535(c) that the assessment must be conducted 
at least every 12 months, as needed when the individual's support needs 
or circumstances change significantly, necessitating revisions to the 
service plan, or at the request of the individual. One commenter 
appreciated these caveats and noted that without them, 12 months could 
be too long a period considering how quickly an individual's needs may 
change. A few commenters indicated that Sec.  441.535(c) uses the word 
``or'' to link the clauses whereas Sec.  441.540(e) uses the word 
``and'' and suggested that CMS be consistent and use ``and' in both 
sections. One of the commenters added that the policy should guarantee 
that a service plan would always be reviewed at the request of the 
individual and suggested that this meaning is best implemented by using 
the word ``and.'' Some commenters added that assessments often need to 
be conducted more often than every 12 months for some populations due 
to frequent changes in needs due to behavior, improved cognitive 
skills, and other emerging health issues. Several commenters suggested 
that CMS clarify either in the regulation or in future guidance that an 
individual's circumstances or needs change significantly when a 
participant's support network changes, including friends and family 
that the participant relies on for physical or emotional support and 
these protections should explicitly include Lesbian, Gay, Bisexual and 
Transgender individuals and their families. Other commenters 
recommended that CMS provide specific timeframes for conducting these 
assessments including both a standard timeframe and an emergency 
timeframe to address situations where a consumer's health or safety may 
be in jeopardy. One commenter asked if it was possible for the State to 
require more frequent assessments but not exceed an annual 
authorization as this would assure consistency across other home and 
community-based services and the potential for moving between service 
modalities.
    Response: We believe that an assessment of functional need should 
be conducted at least every 12 months, at a minimum, to ensure that an 
individual's needs are commensurate to the services authorized in the 
service plan, as we understand that an individual's needs can change 
significantly over time and as a result of various circumstances. 
Regarding the comment that mentioned changes in a participant's support 
network, we expect this paragraph and all parts of this rule to apply 
to all individuals equally regardless of disability, age, sexual 
orientation, or any other factor. We include several provisions related 
to the reassessments that we believe capture various circumstances 
necessitating a reassessment and updates to the service plan. 
Therefore, we do not agree that we need to change the language. In 
addition, States have the option to choose how many reassessments they 
offer as long as the requirements in the final rule are met. We 
appreciate the commenters pointing out the discrepancy between the use 
of ``and'' and ``or'' in different sections of the regulation. We are 
modifying Sec.  441.535(c) to incorporate the word ``and'' to ensure 
appropriate reassessments as necessary.
    Comment: Several commenters voiced support for the face-to-face 
assessment. Other commenters added that in-person assessment meetings 
allow for the building of rapport to improve information sharing. Two 
commenters added that CMS should specify that CFC applicants should 
have the right, though not the requirement, to have the face-to-face 
assessment conducted in their own home as this would decrease undue 
burden on the individual who may have mobility issues and would have 
the added benefit of providing the State with increased information 
about the individual's living situation and support system. Another 
commenter asked that CMS clarify the statement that the assessment be 
conducted at the site where the services are to be provided to assure a 
comprehensive assessment of need. Another commenter suggested that it 
be clarified in the regulations that the annual reassessment should be 
conducted face-to-face. One commenter suggested that the initial 
assessment be conducted face-to-face but CMS should allow subsequent 
assessments to be conducted via a variety of other health technologies 
and tools as appropriate for an individual's needs, accessibility and 
preference.
    Response: We agree that ideally, the assessment of functional need 
would be conducted face-to-face in order for the entity conducting the 
assessment to get a better overall understanding of an individual's 
needs. However, we recognize that many States are developing 
infrastructure and policies to support the use of telemedicine and 
other ways to provide distance-care to individuals to increase access 
to services in rural areas or other locations with a shortage of 
providers. To support these activities, we are indicating here that the 
``face-to-face'' assessment can include any session(s) performed 
through telemedicine or other information technology medium if the 
following conditions apply:
    (1) The health care professional(s) performing the assessment meet 
the provider qualifications defined by the State, including any 
additional qualifications or training requirements for the operation of 
required information technology;
    (2) The individual receives appropriate support during the 
assessment, including the use of any necessary on-site support-staff; 
and
    (3) The individual is provided the opportunity for an in-person 
assessment

[[Page 26858]]

in lieu of one performed via telemedicine.
    We have modified the regulation to allow for use of these 
technologies to meet this requirement. With regard to the location of 
the assessment, we continue to encourage that these assessments be 
conducted in the individual's place of residence, as this would provide 
the best picture of the individual's needs, allow the State to monitor 
the health and welfare of the individual, and allow the State to get a 
sense of how well the services and supports in the service plan are 
meeting the individual's needs. But we note that the CFC proposed rule 
did not require the assessment to be conducted at the site where the 
services are to provided. In addition, as the assessment of functional 
need and the person-centered planning process may take place at the 
same visit, the service planning process section at Sec.  441.540 
indicates that this process take place at times and locations of 
convenience to the individual.
    Comment: Several commenters indicated that assessments, when 
overdone, can be draining and somewhat de-humanizing for participants 
and requested that CMS and States be sensitive to this as they design 
tools and policies for the frequency of assessments. The commenters 
added that recognizing that some people may not experience a change in 
functional status over time, trigger questions that allow the assessor 
to shorten the assessment and minimize intrusiveness, when possible, 
can be beneficial to all. One commenter disagreed with the proposed 
requirement that an assessment be conducted at a minimum of every 
twelve months and indicated, along with another commenter, that States 
should have the discretion to both allow for exceptions where an 
individual's living situation is stable, medical condition is non-
degenerative, and abuse risk factors are low, and to conduct telephone 
or paper reassessments in similar situations. The commenter indicated 
that less frequent assessments promote efficient use of governmental 
resources and are less burdensome on the recipient, but did support the 
allowance for more frequent reassessments if necessary or at the 
individual's request. Similarly, multiple commenters recommended that 
CMS identify certain circumstances in which it would not be necessary 
to conduct a face-to-face assessment of need every 12 months such as 
when an individual can document that their needs are unlikely to change 
from year to year.
    Response: We agree that the assessment process should not be 
overdone or burdensome for individuals participating in CFC. States may 
want to design their assessments to accommodate the needs of 
individuals whose needs are not likely to change significantly from 
year to year. This could save both the individual and the State time, 
but the requirements in the final rule would still apply to these 
circumstances. Assessments must be conducted at least every 12 months. 
We appreciate the commenter's suggestions to identify circumstances in 
which it would not be necessary to conduct reassessments face-to-face. 
While we believe that a face-to-face visit is ideal for the reasons 
previously indicated, we have revised the regulation to allow for the 
use of telemedicine or other information technology medium if certain 
conditions apply. We strongly advise States to consider a face-to-face 
meeting to allow for the closer monitoring of health and welfare and 
appropriate services and supports.
    Comment: One commenter recommended additional guidance for States 
regarding the reauthorization periods for services, stating that 
frequent reauthorizations can be burdensome for individuals with long-
term care needs and often serve as an opportunity to reduce services 
despite no decrease in need.
    Response: We believe that the regulation is clear that the service 
plan is based on the assessment of functional need. If an individual 
requires a particular level or amount of attendant services to meet 
these needs, the services should not be decreased at any time unless an 
individual no longer requires that level of support. An individual must 
agree to and sign any service plan, and therefore, we do not believe 
that we need to issue any further guidance to States regarding the 
reduction of services absent a decrease in need. We do reiterate the 
ability of a State to implement limits on the amount, duration and 
scope of CFC services, as long as these limits are not based on an 
individual's age, type or nature of disability, severity of disability, 
or the form of home and community-based attendant services and supports 
that the individual requires to lead an independent life, as prohibited 
in the statute.
    Comment: One commenter suggested that the assessments not be 
limited to only 1 hour as such planning and discussion requires more 
time and only allowing for 1 hour of payment for the assessment creates 
barriers to preparing an effective plan.
    Response: We do not require that an assessment be limited to 1 
hour. While the Regulatory Impact Analysis section of the proposed rule 
included an estimate of 1 hour to conduct an assessment, this estimate 
was based on an average amount of time, and we did not limit the 
assessment to 1 hour in the regulation.
    Comment: Multiple commenters recommended that the regulations 
require the assessment to be conducted in a linguistically and 
culturally appropriate manner for the individual (and/or their 
appointed representative) as determined by the individual in a fully 
accessible way.
    Response: We agree with the commenter. We expect that States will 
conduct assessments of functional need and the subsequent person-
centered planning process in a linguistically and culturally 
appropriate manner for the individual and as appropriate, their 
representative in a fully accessible way. Such a requirement already 
exists for the development of the person-centered service plan, as 
identified at Sec.  441.540(a)(4).
    Comment: Several commenters indicated that participants should be 
treated with dignity in the needs assessment, regardless of their 
sexual orientation or gender identity.
    Response: We expect that all individuals will be treated with 
dignity in the assessment process and all other aspects of CFC.
    Comment: Two commenters pointed out that the statutory language 
includes a requirement that the assessment be agreed to in writing in 
section 1915(k)(1)(A)(i) of the Act and suggested that the regulation 
explicitly include this language in Sec.  441.535.
    Response: Section 1915(k)(1)(A)(i) of the Act indicates that the 
``person-centered plan of services and supports that is based on an 
assessment of functional need'' be agreed to in writing by the 
individual or, as appropriate, the individual's representative. We 
reflect this statutory requirement at Sec.  441.540(d).
    Comment: One commenter asked if CMS intends for an individual to 
have a right to appeal the assessment.
    Response: Rather than appealing the assessment, individuals have 
the right to appeal their person-centered service plan. The person-
centered service plan must be based on the assessment of functional 
need and agreed to in writing by the individual. If the individual does 
not agree with the findings of the assessment or the proposed service 
plan based on these findings, an individual does not have to agree to 
or sign the service plan. The individual would have the right to 
disagree with the assessment and service plan at any time during the 
process. States electing the CFC Option

[[Page 26859]]

are required as specified in Sec.  441.585, to have procedures for 
appeals of denials and reconsideration of an individual service plan in 
place as part of their quality assurance system for the CFC. The fair 
hearing requirements of 42 CFR part 431, Subpart E apply to CFC in the 
same manner as they apply to other Medicaid State plan services.
    Comment: One commenter asked if the requirement that States conduct 
the assessments allows for the State to contract with a private entity 
and if so, urged CMS to require that States demonstrate that the 
private entity is complying with the law and regulations.
    Response: States are required to comply with all requirements 
related to CFC regardless of whether they contract with private 
entities to fulfill any function of CFC. Contracting with an entity 
does not absolve the State of making sure that all requirements are met 
in accordance with the final regulation.
    Comment: One commenter requested that States be granted the 
discretion to determine the qualifications of persons who may conduct 
functional assessments. Another commenter recommended that the 
assessment of need standards include the qualifications of the person 
conducting the assessment. Another commenter asked who coordinates the 
responsibilities of the assessment and person-centered plan.
    Response: States are responsible for determining the provider 
qualifications of the entities who will conduct the assessments and the 
person-centered planning process. With regard to who coordinates the 
responsibilities of the assessment and the person-centered service 
plan, that is also up to the State. Many States choose to utilize 
service coordinators to fulfill this role.
    Comment: One commenter suggested that the designated representative 
participate fully in the assessment of need and that any representative 
also be evaluated regarding competency to undertake the role of 
representative.
    Response: We agree with the commenter that if an individual has a 
representative, that representative should have an active role in the 
assessment and person-centered planning process to the extent that the 
individual chooses to include that representative. However, we are not 
revising the regulation to make this a requirement. With regard to 
evaluating the competency of an individual to undertake the role of 
representative, we do not believe it is necessary to require such a 
step, although States would have the ability to do so.
    Comment: One commenter indicated that assessments and service plans 
should include an assessment of the consumer's interest and ability to 
self-direct. Another commenter recommended that the assessment include 
an evaluation of the individual's ability to receive care in the 
delivery model available under the State's program, particularly if the 
program is limited to self-directed care, as it would be harmful to an 
individual or his or her representative to permit placement in a self-
directed care model when the individual, or his or her representative 
was not able and/or willing to take on the responsibilities under the 
self-directed model. While these elements are included to an extent in 
the support system section, they should be integrated in the assessment 
process.
    Response: States may include as part of their assessments and 
service plans a determination of an individual's interest and ability 
to self-direct. If the State is only offering CFC via a self-directed 
model with service budget, and the individual or individual's 
representative is not able or willing to assume responsibilities 
inherent in this model, the entity conducting the assessment or 
development of the service plan should identify other programs for 
which the individual would be eligible.
    Comment: Several commenters suggested that CMS should be more 
prescriptive regarding the specific elements incorporated into 
assessments, as they have the capacity to inform quality assurance 
monitoring and measurement of quality outcomes, and suggested that CMS 
require States to develop an assessment of need that includes these 
``standardized elements, key system functionality, and workflow that 
will be sufficiently comprehensive.''
    Response: We appreciate the commenters' suggestions. As indicated 
above, and in the preamble of the proposed rule, a set of universal 
core assessment elements is being developed. As these elements are 
developed, we will work with States to determine the extent to which 
these elements, if not already part of a State's assessment for CFC, 
could be incorporated. States have the flexibility to design a quality 
assurance system that integrates current and future assessment 
elements. We also set forth our expectation in the preamble to the 
proposed rule that States will include a standardized set of data 
elements, key system functionality, and workflow that will be 
sufficiently comprehensive to support the determination that an 
individual would require attendant care services and supports under CFC 
and the development of the individual's subsequent service plan and 
budget. For these reasons, we do not believe it is necessary to add an 
additional requirement for this purpose.
    Comment: Multiple commenters provided feedback specifically 
regarding the statement in the preamble that CMS is currently working 
to determine the universal core elements to include in a standard 
assessment for consistency across programs. Several commenters 
supported our effort in seeking consistency across authorities, 
including the attempt to create commonalities within assessment 
processes. Several commenters expressed various concerns regarding 
standardized assessments. Multiple commenters offered suggestions 
regarding what should be included in a universal assessment. Other 
commenters added that ensuring participants are involved in the 
prioritization of core elements may help to identify elements that have 
a clear link to the planning process, and a few commenters expressed 
interest in commenting on any proposed list. The specific comments as 
summarized above are as follows:
     One commenter suggested that the core elements should 
include an assessment of an individual's ability to perform ADLs and 
IADLs without assistance, assess the ability to self-direct his or her 
services, and should reflect and be consistent with the State's 
functional eligibility criteria for the service.
     One commenter indicated that functional assessments should 
consider that a person's disability can change over time.
     One commenter indicated that functional assessments should 
address the complexities of independent living and active daily living 
outside the home, such as what supports are needed to go to a community 
bathroom.
     Several commenters recommended that universal core 
elements include discussion of unique needs of families, such as 
whether there are needs of children and partners that should be 
addressed in the home. The commenters added that these assessments are 
important for all families because assessing the needs of others in the 
home will help identify the unique needs of the individual requiring 
assistance.
     Another commenter voiced concern about the development of 
universal assessment tools and requested that CMS recognize during its 
universal core elements development process that core elements likely 
will vary by population

[[Page 26860]]

and recommended, along with other commenters, that rather than specific 
assessment elements, CMS develop universal domains that cut across 
programs and populations, and added that program and/or population 
specific elements could be developed. The commenter urged CMS to 
convene a meeting of stakeholders to discuss our vision and the 
viability of universal core domains with elements that might vary by 
population and program.
     One commenter requested that if changes are necessary 
after implementation of CFC has begun, that CMS provide States 
sufficient time to incorporate any new core elements into their 
assessment process.
     One commenter cautioned against requiring additional 
elements to be included in the assessment beyond the statutory 
requirements, as they believed it would increase the assessment time 
for social attendant care providers.
     One commenter urged CMS to proceed with caution with 
regard to standardized assessments for States, as research on HCBS is 
in need of development and codification of assessment elements at this 
stage may be premature. The commenter added that some States have 
broader eligibility standards than others and indicated that they would 
want CMS to adopt a broad view of assessment at this stage to 
facilitate future expansion and experimentation. The commenter also 
suggested that to the extent CMS requires States to use a standardized 
set of data elements, we should consider additional individualized 
assessments of need that may not fit the standardized data elements.
     One commenter asked whether CMS will be including the 
determined universal core elements in the core standardized assessment 
in the State Balancing Incentive Payments Program.
    Response: We appreciate the various points, concerns and 
recommendations made by these commenters. We will take these 
perspectives and recommendations into consideration during the 
development of universal core assessment elements as part of the 
Balancing Incentives Payment Program created under section 10202 of the 
Affordable Care Act, as well as future HCBS guidance. As noted above, 
we intend to share any finalized universal core elements that are 
developed with States as examples of elements that can be incorporated 
into the assessment of functional need for CFC and other HCBS 
assessments as determined by CMS. Future guidance will provide 
additional detail regarding the finalized set of universal core 
assessment elements.
    After consideration of the public comments received, we are 
finalizing Sec.  441.535 with revision, to refer to an ``assessment for 
functional need'', to indicate that the scope of the assessment is 
limited to CFC services and supports, to change ``or'' to ``and'' in 
paragraph (c), to add the ability for States to meet the face-to-face 
requirement through the use of telemedicine or other information 
technology medium if certain conditions are met, and to add a new 
paragraph (d) to indicate ``Other requirements as determined by the 
Secretary.''

J. Person-Centered Service Plan (Sec.  441.540)

    We proposed to require a minimum set of criteria for a person-
centered planning process, and proposed that the resulting person-
centered service plan must reflect the services that are important for 
the individual to meet individual services and support needs as 
assessed through a person-centered functional assessment, as well as 
what is important to the person with regard to preferences for the 
delivery of such supports. We also proposed to require a minimum set of 
criteria for the person-centered service plan. Finally, we proposed 
additional requirements of the plan, including the timeframes for its 
review and revision.
    Comment: Several commenters applauded CMS for recognizing the 
importance of person-centered planning and for seeking consistency in 
person-centered planning expectations across Medicaid authorities. The 
commenters noted that the person-centered planning process should be 
implemented in a customized fashion according to the unique needs and 
preferences of the individual. Two commenters agreed with our proposed 
language and one commenter added that the person-centered planning 
process should be comprehensive.
    Response: We believe that our proposed approach will allow for the 
process to be incorporated with States' current approaches to maximize 
the strengths and preferences of the individual. As indicated earlier 
in the final rule, in an effort to streamline State requirements where 
possible across the programs, we proposed language in the CFC proposed 
rule that in some instances was consistent with other HCBS final rules, 
such as section 1915(j) of the Act, and in some instances was 
consistent with proposed language in a recently proposed rule for the 
section 1915(c) waiver program, which published in the April 15, 2011 
Federal Register. Based on multiple comments and the acknowledgement 
that additional policy work is necessary to maximize the extent to 
which consistency can exist across Medicaid HCBS programs, we are 
revising the language in this section to clarify the requirements of 
this process and resulting service plan as it pertains to CFC. We are 
taking more time to consider all of the thoughtful comments from this 
rule, the comments received from the section 1915(c) proposed rule, and 
comments forthcoming from the section 1915(i) proposed rule to have 
additional policy discussions both internally and with stakeholders. We 
will be issuing subregulatory guidance to provide additional details 
and expectations as it pertains to the person-centered planning process 
and the elements that should be included in a person-centered service 
plan.
    Comment: A few commenters stated that it is extremely important 
that the person-centered planning process not interfere with, or delay 
access to, services. One commenter added that at times extensive 
person-centered assessment and planning processes are so time consuming 
that individuals trying to avoid placement in a facility cannot access 
services in a timely manner and are forced into an unwanted 
institutional placement. A few commenters suggested that the regulation 
require States to include an expedited enrollment process for such 
situations so that individuals may receive basic attendant services and 
supports and avoid institutional placement while the complete person-
centered service plan is being developed. One commenter suggested that 
CMS require States to complete the assessment and service plan within 
30 days of application.
    Response: We agree that the process should not interfere with or 
delay access to services. States currently conduct assessment processes 
and create service plans for HCBS programs. We do not believe that the 
proposed person-centered principles and service plan components for CFC 
should be overly burdensome or time consuming. In the Collection of 
Information Requirements for implementing CFC, we estimated that a 
total of 3.5 hours on average would be necessary per individual, 
including the assessment, the person-centered planning process, service 
plan development and providing an individual a copy of the service 
plan. In addition, as we indicated in the preamble of the proposed 
rule, States will need to have a minimum set of policies and procedures 
associated with the assessment and service plan. These policies and 
procedures should ensure that the process is timely. We expect

[[Page 26861]]

States to establish guidelines that support a timeframe that responds 
to the needs of the individual, thus allowing access to needed services 
as quickly as possible. We encourage States to implement policies and 
procedures that provide services as expeditiously as possible. In 
addition, we are incorporating language originally proposed at 
paragraph (c)(2) to indicate that the person-centered planning process 
must be timely, in addition to occurring at times and locations of 
convenience to the individual.
    Comment: Another commenter suggested that while the statute uses 
the term person-centered, CMS should encourage States to use a 
consumer-directed process as consumer-directed planning puts the 
individual in charge of the planning process whereas the term person-
centered has been used to allow others on a planning team to make all 
important decisions ``in their best interests.''
    Response: We appreciate the commenter's perspective and the term 
consumer-directed, but do not agree that the language should be changed 
for this rule. To be consistent with other Medicaid programs, we will 
maintain the phrase ``person-centered'' in referring to this process. 
That said, CFC has a strong focus on individual choice and direction 
that is evidenced throughout the regulation. For the person-centered 
service plan, much effort was put into ensuring that an individual 
maintains a central role in both the planning process and finalizing 
the service plan. In addition, we are adding at Sec.  441.540(a) that 
the person-centered planning process must be driven by the individual.
    Comment: One commenter suggested that more guidelines be provided 
to States for the person-centered planning process as the proposed rule 
does not include qualifications for the entities responsible for the 
planning process and the entities States utilize may not have adequate 
training in self-determination/direction or any true person-centered 
planning training. The commenter suggested that Sec.  441.540(c) 
include requirements for the States' policies and procedures including 
the qualifications, training and quality assurance of those conducting 
the person-centered plans. Another commenter indicated that it would be 
beneficial, particularly for individuals with mental illness, if the 
person-centered service planning process included a requirement for a 
facilitator who had more experience and information than family or 
other outside individuals chosen by the individual. The commenter noted 
that in mental health service planning, individuals need some support 
to fully understand their choices and explore their preferences, and to 
learn how to assess what support they may need to carry out the plan. 
The commenter indicated that peers trained to perform this facilitator 
role might be the best option and suggested that States could be 
encouraged to consider that option.
    Response: States are responsible for determining the provider 
qualifications of the entities who will conduct the assessments and the 
person-centered planning process as long as the requirements in the 
final regulations have been met. It is expected that these entities 
would have adequate training to perform this function. We agree 
additional guidance should be provided to States and we intend to issue 
future guidance, as indicated above, regarding our vision of the 
person-centered process and how we intend to apply that philosophy 
across Medicaid HCBS programs.
    Comment: One commenter asked if States can leverage existing single 
entry point entities currently under contract for section HCBS 1915(c) 
waiver assessments and planning processes to conduct the person-
centered planning process outlined in Sec.  441.540. Another commenter 
asked CMS to clarify whether the State can delegate its 
responsibilities to other entities, such as a managed long-term care 
plan, to develop service plans, budgets, etc.
    Response: States have the flexibility to leverage existing entities 
to conduct various functions required in CFC, provided all requirements 
of the final regulation are met.
    Comment: One commenter stated that the proposed rule implies that 
two separate meetings will be held, one to complete the assessment and 
one to develop the service plan through the person-centered planning 
process, and recommended, along with another commenter, that the rule 
reflect the ability to combine these meetings.
    Response: We did not intend to require two separate and distinct 
meetings. While individuals and States may choose to conduct separate 
meetings, particularly depending on the length of the assessment and 
the availability of all parties involved, we believe that it is 
appropriate that the assessment of need and the person-centered 
planning process could be combined into one meeting. We have not 
revised the regulation, to maintain flexibility, based on individual 
circumstances.
    Comment: Two commenters supported the identification of all of a 
person's needs (not just what is offered under CFC). One of the 
commenters also supported the identification of the individual's 
desired outcomes from services and suggested that the assessment cover 
the individual's broad life goals and desires as well. The other 
commenter added that CMS should require that all needs identified 
during the assessment be addressed in the service plan, ensuring that 
the needed service is actually being addressed either informally and/or 
by applying to other programs and benefits.
    Response: While this comment references the assessment, the 
specifics of the comment relate to this section so we will address this 
comment here. It is our expectation that during the assessment process, 
and the subsequent person-centered service plan process, an 
individual's CFC service and supports needs, as well as what is 
important to the person with regard to preferences for the delivery of 
such services and supports, be identified and addressed. In States 
conducting a more comprehensive assessment that exceeds the scope of 
CFC services and supports, a determination would then need to be made 
as to which services and supports could be delivered under CFC and 
which are more appropriately delivered through another benefit or 
informal support. For the purposes of CFC, States would only be 
required to provide the services and supports required under CFC as 
indicated by the final rule. However, we encourage States to coordinate 
among all the services an individual is eligible for to determine how 
to best meet an individual's needs as identified during this 
assessment. As indicated above, we will issue additional guidance 
regarding our vision of the person-centered process and how we intend 
to apply that philosophy across Medicaid HCBS programs.
    Comment: One commenter suggested that CMS add language that 
requires coordination with other government-funded health services that 
may also be providing personal care to consumers, stating that the 
absence of such clarity can threaten the continuity of care and risk 
care duplication.
    Response: It is our expectation that during the assessment of 
functional need and the subsequent person-centered service planning 
process, all attendant/personal care needs and currently received 
services and supports in place to meet those needs would be identified. 
A determination would then need to be made as to which services and 
supports could be delivered under the CFC Option and which are more 
appropriately delivered through another benefit. States are familiar 
with this process and we do not agree that

[[Page 26862]]

additional regulatory language is necessary. States are expected to 
take every step to ensure that services are not being duplicated and 
individuals currently receiving attendant services and supports 
experience continuity of care during a transition to CFC.
    Comment: One commenter noted that the criteria described including 
consumer direction, convenience to time and place, cultural 
considerations, conflict resolution, the ability to alter the plan and 
real choice are all good markers for a good process but indicated that 
these should be regarded as a minimum level of responsiveness and not a 
maximum. The commenter added that respecting a person's gender 
identification is also important.
    Response: We appreciate the commenter's perspective regarding the 
criteria being regarded as a minimum level of responsiveness and not a 
maximum. We agree that respecting an individual's gender identification 
is important. We expect that all individuals will be treated with 
respect.
    Comment: One commenter suggested that CMS offer guidance on how to 
provide necessary support to ensure the person with a disability has 
meaningful input in the planning process.
    Response: We will consider this suggestion as we work on additional 
guidance regarding our vision of the person-centered process and how we 
intend to apply that philosophy across Medicaid HCBS programs. In the 
meantime, we will look to States to implement a person-centered 
planning process that ensures meaningful input from all individuals in 
the CFC program.
    Comment: One commenter voiced concern over the requirement that the 
person-centered planning process must occur at ``times and locations of 
convenience to the individual'' as referenced in paragraph (a)(3), as 
they believed that this is overly restrictive and beyond the statutory 
requirement. The commenter stated that the process should be scheduled 
when it is mutually convenient for both the agency staff and 
individuals and added that it may be necessary to have the assessment 
conducted at the individual's home so that the staff can more 
accurately assess the client's needs in the context of their home 
environment and community. Another commenter urged CMS to include 
language that will allow States flexibility to put reasonable limits on 
the optional locations for these assessments/plans. One commenter 
indicated that to adequately assess for environmental as well as health 
and safety needs, States must be allowed to require the face-to-face 
meeting be held in the participant's place of residence and recommended 
deleting the words ``and locations'' from paragraph (a)(3).
    Response: We appreciate the commenters' concerns and suggestions. 
The commenters appear to be talking about both the assessment of 
functional need, which was required in the proposed rule to be 
conducted face-to-face with the individual, and the person-centered 
service plan development, which is to occur at times and locations of 
convenience to the individual. While we do not prescribe the setting in 
which the assessment of functional need takes place, we encourage the 
assessment to be conducted in an individual's home in order for the 
entity conducting the assessment to get a more informed perspective of 
the individual's supports and needs in their residence. However, we are 
not mandating this as some individuals will use CFC to transition from 
an institutional setting, and therefore, would be assessed while still 
residing in the institution. With regard to the person-centered 
planning process, if this process takes place separate and apart from 
the assessment of functional need, we expect that this meeting be 
scheduled at a time and place that is convenient to all parties taking 
part in the process, but particularly to the individual. We recognize 
that there will be practical constraints for the professionals involved 
in the person-centered planning process and the assessment of 
functional need, such as availability being limited to certain business 
hours; however, we do not believe it is necessary to revise the 
regulation as suggested.
    Comment: One commenter asked what the expectations/requirements are 
for States in terms of supports that address the needs identified by 
the assessment of expanded areas such as employment, school, income and 
savings, and social goals as referenced in paragraph (b)(3). The 
commenter indicated that providing this expanded assessment will result 
in additional costs to States and it is unclear what States would be 
required to address. The commenter asked if these requirements would be 
limited in scope to ``the provision of services'' as stated in Sec.  
441.535(a)(2) and the qualification at Sec.  441.515 that States 
provide CFC ``in a manner that provides the supports that the 
individual requires to lead an independent life.'' The commenter asked 
CMS to confirm that a State would not be required to provide money-
management support, and it would not have to have an outcome measured 
in the quality assurance system, if an individual had the goal to save 
money for their grandchild's college fund in their assessment/plan. The 
commenter wanted to know how this expands a State's responsibilities or 
liability.
    Response: While this comment references aspects also covered in the 
assessment section, the main issue expressed in this comment relates to 
this section so we will address this comment here. As indicated above, 
we have revised the regulation to indicate that it is only the need for 
services and supports within the scope of CFC services that must be 
assessed. It is our expectation that during the assessment process, and 
the subsequent person-centered service plan process, an individual's 
CFC service and supports needs as well as what is important to the 
person with regard to preferences for the delivery of such services and 
supports be identified and addressed. In States conducting a more 
comprehensive assessment that exceeds the scope of CFC services and 
supports, a determination would then need to be made as to which 
services and supports could be delivered under the CFC and which are 
more appropriately delivered through another benefit or informal 
support. We believe that many States already have such a system in 
place. For the purposes of CFC, States would only be required to 
provide the services and supports required under CFC as indicated by 
the final rule. However, we encourage States to coordinate among all 
the services an individual is eligible for to determine how to best 
meet an individual's needs as identified during this assessment.
    After considering the feedback received and the acknowledgement 
that additional policy work is necessary to maximize the extent to 
which consistency can exist across Medicaid HCBS programs, we are 
revising the language in this section to clarify what must be included 
in the plan as it pertains to CFC. As indicated above, we are taking 
more time to consider all of the thoughtful comments from the CFC 
proposed rule, the section 1915(c) proposed rule and the comments we 
will receive in response to the forthcoming section 1915(i) proposed 
rule to have additional policy discussions both internally and with 
stakeholders. We plan to issue additional guidance regarding our vision 
of the person-centered process and how we intend to apply that 
philosophy across Medicaid HCBS programs.
    Comment: One commenter indicated that in Sec.  441.540(a)(5), CMS 
describes the requirements for service plans

[[Page 26863]]

including a requirement that States have ``strategies for solving 
conflict or disagreement within the process, including clear conflict 
of interest guidelines for all planning participants'' and in Sec.  
441.555(b)(2)(xiv), CMS requires that participants be provided 
``information about an advocate or advocacy systems * * * and how 
[they] can access [such] systems.'' The commenter then pointed out that 
CMS does not discuss CFC appeals processes in the proposed rule and 
recommended that CMS clarify the appeals processes and the relation to 
the provisions noted above. Another commenter asked if CMS plans to 
intend for an individual to have the right to appeal the service plan. 
A commenter suggested that CMS require that both the final written 
assessment and the service plan include information on the individual's 
right to appeal if she/he disagrees with the assessment or any parts of 
the service plan.
    Response: An individual has the right to appeal the service plan. 
The person-centered service plan, which is based on the assessment of 
functional need, must be finalized and agreed to in writing by the 
individual. If the individual does not agree with the findings of the 
assessment or the proposed service plan based on these findings, an 
individual does not have to agree to or sign the service plan. The 
individual would have the right to disagree with the assessment and 
service plan at any time during the process. As such, States electing 
the CFC option are also required to have appeals for denials and 
reconsideration procedures of an individual service plan in place as 
part of their quality assurance system for the CFC.
    Comment: Several commenters noted that it is not clear what 
components of the service plan proposed by CMS are ``required'' versus 
``recommended'' and pointed out that there is also inconsistency in the 
use of terms (for example, Support Plan, Service Plan, and Plan of 
Care). The commenters recommended that, regardless of the term chosen, 
the term reflect the person-centered approach and participant-directed 
nature of CFC.
    Response: As indicated in the proposed rule, the elements in Sec.  
441.540(b) are all required. This is evidenced by the use of the term 
``must'' in the last sentence prior to the numbered list of elements. 
We are revising the regulation to ensure that all ``plan'' references 
throughout the rule indicate that it is the ``person-centered service 
plan.'' In addition, based on multiple comments regarding the 
requirements of the plan at Sec.  441.540(c), we have removed the 
duplicative requirements that were already captured in Sec.  441.540(b) 
and have moved the remaining requirements to the more appropriate 
Support System section at Sec.  441.555.
    Comment: One commenter stated that the person-centered service plan 
should reflect that the place where the individual resides is the least 
restrictive setting available based on the individual's need for a 
handicap accessible place of residence and affordability, as well as 
the consumer's freedom of choice to live in that particular place of 
residence. The commenter added that the person-centered service plan 
should determine the appropriate setting for an individual covered 
under CFC.
    Response: While we agree that the service plan could reflect that 
an individual resides in the least restrictive setting of their choice, 
we do not agree that the service plan should determine the appropriate 
setting for an individual. We have revised the service plan process to 
add paragraph (a)(8) requiring States to record the alternative home 
and community-based settings that were considered by the individual. We 
also amended the person-centered service plan to require an assurance 
that the setting in which the individual resides is chosen by the 
individual. This will be reflected as a new paragraph (b)(1), and all 
existing text will be renumbered accordingly.
    Comment: One commenter suggested that to protect the integrity of 
the program and to ensure adherence to service plans, that CMS allow 
for fiscal or other program intermediaries to validate service plans, 
issue rules for the training of attendants, and develop a process to 
ensure that services and supports are assessed for appropriateness.
    Response: States may decide to have a mechanism by which a service 
plan is compared to the services provided to protect the integrity of 
the program, but we are not clear how allowing a fiscal or other 
program intermediary to issue rules for the training of attendants 
would protect program integrity. States have the discretion to 
determine provider training and qualifications as long as the 
requirements in the final rule are met. We believe the assessment of 
functional need, person-centered service planning process and 
finalizing of the service plan should result in appropriate services 
and supports being provided to the individual to meet their assessed 
needs.
    Comment: One commenter asked CMS to clarify whether a State may use 
a prior authorization process to ensure services rendered and paid for 
match the service needs indentified through the service planning 
process.
    Response: States have the flexibility to use various methods to 
ensure that services provided match the needs identified through the 
assessment and service plan. States will need to describe in their 
State plan amendment how they propose to utilize the prior 
authorization process.
    Comment: Two commenters suggested that the development of the 
person-centered service plan, as spelled out in the proposed rule, 
should include health promotion and wellness components designed to 
mitigate health risks and maintain and support healthful behaviors.
    Response: As indicated above, additional policy work is necessary 
to maximize the extent to which consistency can exist across Medicaid 
HCBS programs and we are taking more time to consider all of the 
thoughtful comments from this rule, comments received from the section 
1915(c) proposed rule, and forthcoming comments from the section 
1915(i) proposed rule to have additional policy discussions both 
internally and with stakeholders. We plan to issue additional guidance 
regarding how we intend to apply the person-centered philosophy across 
Medicaid HCBS programs. We will continue to consider this comment 
during that process. In the meantime, there is no prohibition against a 
State incorporating these elements into the development of the person-
centered service plan. In addition, we are taking this opportunity to 
add an additional requirement that will allow for the incorporation of 
future person-centered planning requirements published by CMS.
    Comment: A commenter noted that paragraph (b)(2) refers to the 
``person-centered functional assessment'' and recommended that CMS 
change the language to: ``reflect clinical and support needs as 
identified through a functional assessment'' as they believe that Sec.  
441.540 needs to more clearly reflect the distinction between the 
assessment of functional need and the person-centered service plan.
    Response: We are revising the regulation to say ``reflect clinical 
and support needs as identified through the assessment of functional 
need.'' This is now paragraph (b)(3).
    Comment: Several commenters suggested that in paragraph (b)(3) CMS 
change the phrase ``individually identified goals'' to ``participant 
identified goals.''
    Response: We do not agree with the commenters' suggestion. While an 
individual receiving services and

[[Page 26864]]

supports under CFC will be a ``participant'', we choose to maintain the 
term ``individual.'' This term is used throughout the regulation and we 
prefer to be consistent so as to not create any unnecessary confusion.
    Comment: A commenter encouraged CMS to require in paragraph (b) 
that the standard assessment of need include the individual's 
assessment of their strengths and their goals regarding housing, 
services, education, transportation, employment, recreation and 
socialization, wellness and the supports needed to enable them to live 
independently in the community setting of their choice, in addition to 
a person's preferences.
    Response: The proposed rule at Sec.  441.540(b)(1) indicates that 
the person-centered service plan must reflect the individual's 
strengths and preferences. Section 441.540(b)(3) proposed language to 
address an individual's goals and desires and included the term ``may'' 
to suggest aspects that could be included in the person-centered 
service plan. Based on comments and further consideration we have 
decided not to specify particular aspects of an individual's strengths, 
preferences and goals that could be assessed or included in the person-
centered plan as we do not want to create an unintended limit on the 
aspects that could be included in the service plan. Therefore, we are 
revising the regulation to read ``Include individually identified goals 
and desired outcomes'' at paragraph (b)(4).
    Comment: Several commenters indicated that the proposed rule 
appropriately sets forth multiple factors to be considered in 
determining the need for and authorization/provision of services, but 
they, and multiple other commenters, voiced concern regarding the 
identification of informal supports. Other commenters supported the 
consideration of natural and informal supports but did not want it to 
be construed that the existence of family, natural and other informal 
supports could be used as a reason to reduce the level of services an 
individual would receive. Multiple commenters indicated that these 
supports can be considered as appropriate in determining the 
individual's needs, strengths, and preferences, but eligibility and 
supports covered for an individual by CFC should be based upon 
functional need, independent of the existence of family or other 
informal caregivers. Several commenters believed that reliance on 
family and other informal supports who may not be skilled/trained to 
care for certain conditions and may have limitations of their own could 
lead to additional strain on families and could put the consumer at 
risk. One commenter voiced concern that the regulation does not include 
the CMS Handbook definition of informal care (that which is capable, 
available and freely given) and that without emphasis on ``freely 
given'' States may assign the responsibility of this care to family 
members and other informal supports. Another commenter suggested that 
at a minimum, if family members or other informal supports are 
identified in the assessment/plan, the participant must indicate 
acceptance of the unpaid supports in lieu of provided services and the 
family members or other informal supports must indicate they are 
willing and able to perform the roles/tasks. The commenter added that 
the participant and family/informal supports must also have the ability 
to no longer accept or to withdraw their support without harming the 
beneficiary and the plan should be adjusted to reflect the lost 
support. Another commenter added that if the State includes family or 
other informal caregivers in the service plan, it should be a 
requirement that the needs of the family or other informal caregiver 
also be assessed and addressed, especially if crucial aspects of the 
service plan depend on these caregivers. The commenter added that such 
an assessment would identify the family caregiver's needs, strengths 
and preferences and connect such caregivers to critical supports such 
as respite, training or other assistance, as helping the caregiver to 
continue in their caregiving role could delay or prevent 
institutionalization of the care recipient. Another commenter indicated 
that the consideration of unpaid assistance needs to take into account 
the sometimes oppressive influence this has on family and personal 
relationships adding that these relationships should not be forced to 
become strictly defined as a caregiver/care-receiver relationships at 
their core level and that the provision of unpaid but necessary 
services can affect the ability of the consumer to control how his/her 
services are provided. Other commenters urged CMS to remove the 
language from the preamble.
    Response: While these comments reference aspects also referenced in 
the preamble for assessment of need, the requirement referenced is 
included in Sec.  441.540 so we will address this comment here. We 
appreciate the concerns regarding the potential that the identification 
of natural supports could result in the decrease of services provided 
under CFC, or these natural supports might be weakened as a result of 
the expectation that they be provided. We expect that the 
identification of these natural, unpaid supports be taken into 
consideration for the purpose of understanding the level of support an 
individual has, and should not be used to reduce the level of services 
provided to an individual unless the individual chooses to receive, and 
the identified person providing the support agrees to provide, these 
unpaid supports to the individual in lieu of a paid attendant. We have 
modified the regulation to incorporate this intention. We also expect 
that if an individual is receiving services and supports, either paid 
or unpaid, that if circumstances change, an individual has the right to 
request a reassessment of need and/or revision to the person-centered 
plan. For the concern regarding individuals providing supports having 
the skills or training to care for certain conditions or having their 
own limitations, having a full picture of the individual's paid and 
unpaid supports will assist the State and the individual in determining 
what level of support the individual requires and what services need to 
be accessed to meet the individual's needs and ensure their health and 
safety. With regard to the recommended requirement that the needs of 
the family or other informal caregiver also be assessed and addressed, 
we agree that it is important to consider these needs to encourage and 
preserve support for the individual, but we do not agree that this 
should be an additional requirement in the CFC final regulation. As 
noted above the order of the paragraphs has shifted and this 
requirement is now reflected at paragraph (b)(5).
    Comment: One commenter indicated that the risk assessment portion 
of the planning process is a challenge, as many consumers are competent 
adults and need to be allowed the same level of freedom and personal 
control as a non-disabled person, and allowed to assume risk at the 
same levels as non-disabled persons. The commenter voiced concern that 
this section could potentially be used to impede a consumer's goals and 
desires and recommended that if there are disability-related conditions 
that impact the ability of the individual to assess risk, their plan 
should only impinge on their freedom commensurate with the need for 
reasonable safety. The commenters added that strategies for risk 
abatement should include voluntary participation in skills training and 
peer support to improve their ability to access and assume risk, and 
that the consumer's use of additional training for the

[[Page 26865]]

personal assistant related to risk avoidance may be another strategy. 
Another commenter asked that CMS clarify that a contingency plan should 
be part of the service plan, to ensure that individuals are prepared 
and have a backup attendant care provider if the regular attendant care 
provider is not able to provide services.
    Response: We agree that individuals should have personal control 
and the opportunity to assume risk. We proposed at Sec.  441.540(b)(5) 
that the person-centered service plan reflect risk factors and measures 
in place to minimize them, including backup strategies when needed. 
Service plans will need to reflect risk factors and measures in place 
to minimize them for each individual regardless of disability or level 
of need. Nothing in this section should be used to impede an 
individual's goals and desire outcomes or to impinge on an individual's 
freedom. As noted in response to comments received in the Definitions 
section, we are modifying the requirements of the person-centered 
service plan to remove the ``as needed'' language, to indicate that all 
individuals should have an individualized backup plan as specified in 
paragraph (b)(6). We would like to point out that for the purposes of 
CFC, this backup plan could include formal or informal backup supports 
as part of the plan.
    Comment: A commenter voiced concern regarding the requirement that 
the individual sign the service plan as this may not always be possible 
due to disability or inability to write, and suggested that the 
regulation be amended by adding ``if possible.'' Another commenter 
suggested language in paragraph (b)(6) that would allow an individual's 
representative to sign the service plan when appropriate, and suggested 
the removal of a similar requirement in paragraph (d), as they felt the 
emphasis should be related to the individual and persons responsible 
for implementation. Another commenter indicated that the requirement 
for all individuals and providers to sign the plan may be onerous and 
logistically complicated as consumers can change providers frequently 
for a variety of reasons, and consumers should be able to obtain 
agreement from providers through formats other than the service plan. 
Other commenters added for clarification that the signature expectation 
is only for those involved with the actual assessment/planning process 
and not for the providers and others not present who are responsible 
for the implementation of the plan. Another commenter recommended that 
the language in paragraph (b)(6) be changed to: ``be distributed to all 
individuals and providers responsible for its implementation and signed 
by all parties within 30 days of the development date'' as they felt 
that requiring all provider signatures at the point of development 
would delay services.
    Response: After consideration of these comments, we have revised 
the final regulation to indicate that the plan be finalized and agreed 
to in writing by the individual and signed by all individuals and 
providers responsible for its implementation. While we understand that 
some individuals may not be able to provide an actual signature, we 
believe that it is important to capture that the individual agrees to 
the service plan as finalized. Should an individual not be able to make 
any indication that they agree with the plan in writing or the 
individual does not have a representative who can do so on the 
individual's behalf, States will need to explain the methods they 
propose to use to indicate that the individual agrees with the service 
plan. While we do not specify the timeframe by which States must obtain 
the signature of the providers responsible for implementation of the 
plan, we expect that any provider that is responsible for implementing 
services or supports authorized in the service plan should receive and 
sign the individual's service plan, as this would be necessary to not 
only understand the level of CFC services and supports needed by an 
individual, but also the individual's strengths, preferences, goals and 
desired outcomes related to the provision of the services and supports. 
We are reflecting this change at a revised paragraph (b)(9) under Sec.  
441.540, and have removed this language from paragraph (b)(6) and 
paragraph (d).
    Comment: One commenter suggested that CMS should clarify explicitly 
at paragraph (b)(7) that the plan must also be understandable to the 
individual's representative. A few commenters recommended that the 
regulations require the development of the service plan be conducted in 
a linguistically and culturally appropriate manner for the individual 
(and/or their appointed representative) as determined by the individual 
in a fully accessible way.
    Response: We appreciate the commenters' suggestions. However, we do 
not agree that paragraph (b)(7) under Sec.  441.540 needs to clarify 
explicitly that the plan must be understandable to the individual's 
representative as the language at paragraph (b)(7) encompasses a 
representative. We also believe that the requirement at Sec.  
441.540(a)(2), that the planning process provides necessary support to 
ensure the individual directs the process to the maximum extent 
possible, and the requirement at paragraph (a)(4), that the process and 
plan reflects cultural considerations of the individual, encompass the 
other commenters' suggestions.
    Comment: With regard to the requirement to include a timeline for 
review, a commenter suggested that CMS add a requirement at paragraph 
(b)(8) that reviews of the service plan occur at least every 18 months 
to assure that not too much time will pass between reviews and does not 
place undue burden on the participant or service providers. Another 
commenter suggested that the person-centered plan of care be revised as 
needed to reflect the goal of providing the least restrictive setting. 
Another commenter strongly supported the periodic reassessment and 
revision of the care plan at least every 12 months. Another commenter 
suggested that CMS require timely review (within 1 week) when the 
individual believes that the plan needs to be revised. Multiple 
commenters recommended that paragraph (b)(8) be expanded to read 
``include a timeline for review and implementation of changes.''
    Response: While we proposed at paragraph (b)(8) that the person-
centered service plan include a ``timeline for review'', we also 
proposed requirements at Sec.  441.540(e) for reviewing the service 
plan. To clarify our expectation regarding review of the service plan, 
we are removing the language at paragraph (b)(8), as it is encompassed 
later in this section and have moved the language proposed at paragraph 
(e) to (c) with the exception of ``or the individual's representative, 
as applicable'' which we have removed.
    Comment: One commenter stated that the ``agreement'' portion of the 
service plan, as required in paragraph (d), needs to be strengthened. 
The commenter indicated that ``agreement'' needs to be elevated to the 
level of a ``contract'' to avoid what they perceive to be the 
``pitfalls'' of current HCBS waivers. The commenter indicated that in 
their State, the waiver service plan can be unilaterally altered by the 
State without the ability of clients to challenge the State's decision. 
The commenter believes this is a fundamental denial of a civil right, 
must not be extended into the new rule, and must be corrected within 
current HCBS waivers.
    Response: We disagree with the commenter's suggestion that CMS 
change the service plan agreement language to a contract. We believe 
that the requirement proposed at

[[Page 26866]]

Sec.  441.540(d), now reflected in paragraph (b)(9), that the service 
plan must be agreed to in writing by the individual or their 
representative, as applicable, will ensure that the service plan is 
approved by the individual. States may not alter an individual's 
service plan without the individual's knowledge or approval. In 
addition, an individual has the right to appeal any State decision to 
decrease services. With regard to other HCBS programs including 
waivers, changes to their processes are not within the scope of this 
regulation.
    Comment: With regard to distribution of the plan at Sec.  
441.540(b)(10), one commenter recommended that CMS should require that 
a copy of the service plan be placed in the hands of the consumer. 
Another commenter suggested that the phrase ``including the 
participant'' makes it look like providing the plan to the individual 
is an afterthought and that the consumer should be able to decide who 
else received a copy of the plan, as there may be services or goals 
identified in the plan that do not need to be shared with every 
provider.
    Response: It is expected that each individual receiving services 
under CFC would receive a copy of the finalized service plan. We 
interpret the commenter's recommendation to mean that we should require 
States to hand-deliver the service plan to the individual. While we do 
not discourage a State from doing so, we do not require that the 
service plan be hand-delivered to each individual. The intent of the 
language ``including the participant'' was to emphasize that the 
individual must receive a copy of the plan. We have revised paragraph 
(b)(10) to make this clear. We appreciate the commenter's indication 
that individuals should determine with whom to share their person-
centered service plan. While we do not believe it is necessary to 
include this requirement in the regulation, we expect an individual's 
preferences for the level of information in the plan that is shared 
with other providers to be respected.
    Comment: One commenter indicated that the service plan should be 
composed to fully meet the needs of the individual regardless of the 
service delivery model and any shortcomings of a plan within the 
limitations of the Medicaid program or the delivery model should be 
referenced to the individual. The commenter added a person needs to be 
informed of their options, the risks of choosing particular options, 
the alternatives available, and the anticipated consequences of any 
alternatives. The commenter added that if a limitation in the State 
program puts an individual at risk of adverse consequences that could 
be mitigated in an alternative approach available under the State 
program, the service planning process should provide the individual 
with that information before the plan is finalized.
    Response: It is our expectation that during the person-centered 
planning process and development of the service plan, the issues 
indicated above and options available will be articulated and discussed 
with the individual, regardless of the service delivery model. In 
addition, we are taking this opportunity to make clear that the service 
plan requirements for the self-directed model with service budget must 
be incorporated into the person-centered service plan when applicable.
    Comment: Several commenters requested that CMS explain the 
rationale for service plan criteria related to the ``provision of 
unnecessary or inappropriate care.''
    Response: This requirement was included to emphasize that the 
service plan should reflect and authorize only the services and 
supports necessary to meet the assessed needs of the individual.
    Comment: One commenter asked who has final approval of the service 
plan. Several commenters stated that the preamble explains that the 
entire plan must be in writing and agreed to by the individual, but the 
regulation only requires ``signing off'' on the plan in writing. The 
commenters recommended that specific requirements be put in the plan 
itself, in writing, for the consumer to have adequate time to review 
the plan themselves or with others.
    Response: The regulation does not indicate that an individual only 
needs to ``sign off'' on the service plan, but requires the service 
plan be ``finalized and agreed to by the individual.'' As the 
individual, and as appropriate the individual's representative, are 
included in the planning process and the development of the service 
plan, we believe that the individual should know what the plan includes 
throughout the process. Additionally, the service plan, as a whole, 
must be finalized and agreed to, in writing, by the individual. 
Therefore, we do not agree that revisions to the regulation are 
necessary.
    Comment: One commenter indicated that the main conflict of interest 
in the care planning process emanates from the pressure on State 
agencies and their contractors to keep spending to certain levels, to 
promote or discourage the use of certain services based on cost and 
availability, or to enforce unwritten rules about levels of services 
which results in consumers previously determined eligible for services 
experiencing terminations either of particular services or of their 
HCBC eligibility all together. The commenter recommended that the 
conflict of interest provision at Sec.  441.540(c)(4) address these 
conflicts as they are very real and limit consumer access to the 
services they need.
    Response: The person-centered service plan is based on an 
assessment of functional need. If an individual requires a particular 
level or amount of attendant services to meet these needs, the services 
should not be decreased at any time unless an individual no longer 
requires that level of support. An individual must agree to and sign 
any service plan, and therefore, we do not believe that we need to 
issue any further guidance to States regarding the reduction of 
services absent a decrease in need. We do reiterate the ability of a 
State to implement limits on the amount, duration and scope of CFC 
services, as long as these limits are not based on an individual's age, 
type or nature of disability, severity of disability, or the form of 
home and community-based attendant services and supports that the 
individual requires to lead an independent life, as prohibited in the 
statute.
    The conflict of interest provisions proposed at Sec.  441.540(c)(4) 
were intended to protect the individual and relate to similar 
protections at Sec.  441.555. We are moving these protections to the 
more appropriate Support System (Sec.  441.555).
    Comment: Two commenters indicated that there is potential for a 
significant conflict of interest resulting in public and private 
entities that authorize or pay for services and the individuals 
affiliated with them participating in the development of the person-
centered service plan and suggested CMS include these entities at Sec.  
441.540(c)(4).
    Response: We believe that this is already addressed in this section 
as paragraph (c)(4) indicates ``that apply to all individuals and 
entities, public or private.'' As indicated above, this section is 
being moved to the more appropriate Support System.
    Comment: One commenter recommended that the conflict of interest 
provisions be clarified, as they may exclude a provider who conducts an 
assessment from providing one or more services to individuals under 
CFC, which the commenter believes would undermine their State's current 
delivery system. The commenter indicated that its State pioneered and 
predicated its core models of long term care and home care on the 
consolidation of the assessment, care management and

[[Page 26867]]

service delivery functions within, and at the provider level, which has 
been very successful in terms of cost efficiency, timely integration, 
and provision of services in accordance with the individuals needs. The 
commenter noted that the prohibition of this coordinated approach 
should not be part of CFC and stated that it was not required by the 
statute.
    Response: As noted earlier, the conflict of interest provisions 
have been relocated to the more appropriate Support System, Sec.  
441.555. While we do not believe it is generally appropriate for an 
entity that would benefit financially from the assessed needs of the 
individual to also be the entity to perform the assessment of 
functional need or the person-centered planning process for the 
individual, we acknowledge that in some geographic areas there may be 
circumstances in which the only willing and qualified entity to perform 
the assessment of functional need and/or the development of the person-
centered service plan also provides the HCBS services and supports in 
that area. Therefore, we are adding additional language to address this 
circumstance.
    Comment: Multiple commenters expressed concern regarding the 
proposed conflict of interest standards included in Sec.  
441.540(c)(4). One commenter indicated that the proposed rule is 
contradictory with regard to the assessment of need in that section 
Sec.  441.535 indicates that family members can support the individual, 
serve as representatives and be paid providers whereas paragraph (c)(4) 
excludes the family member from conducting the assessment/service plan. 
Another commenter suggested that there was a contradiction in the 
conflict provisions between the mandate that the individual be 
permitted to designate who may assist them with service plan 
development and who may provide the actual services. Multiple 
commenters indicated that the total prohibition of family members is 
too broad and may inappropriately undermine the preference of 
individuals to choose persons they wish to involve. Another commenter 
added that while the commenters agree that the assessment and planning 
process needs to be done by a neutral party, the regulation seems to 
include and exclude family/other participation. Several commenters 
urged CMS to develop a specific process by which the individual or 
authorized representative can make a written informed decision to waive 
the prohibition on family member involvement in development of the 
service plan that includes safeguards to facilitate an independent 
informed choice to waive the prohibition. Multiple commenters suggested 
that ``involved in'' at paragraph (c)(4) be changed to ``conducting'' 
as this conflict of interest provision should apply only to the team 
conducting that assessment and creating the plan, as a relative may be 
``involved in'' the process to help the individual with any one of a 
number of functional limitations, assist with communication, or 
distribute and collect materials. Another commenter recommended that 
the words ``and service plan development process'' be removed from 
paragraph (c)(4) and that CMS change the language in the same paragraph 
to: ``at a minimum, these standards must ensure that the individuals or 
entities conducting that assessment of need are not.'' Multiple 
commenters objected to the conflict of interest provisions in paragraph 
(c)(4) altogether and suggested that CMS remove them, stating that 
service plan development should often include family members and 
service providers and that it is counterproductive, and potentially 
undermines a person's preference, to exclude them. Other commenters 
asked that CMS provide clarifying language to explain the intent of the 
provision. Other commenters asked CMS to provide guidance reconciling 
an individual's ability to choose participants with the requirement 
that certain individuals are not to be included in the planning 
process.
    Response: These comments illustrate the need to clarify the intent 
of this provision. We acknowledge the confusion caused by use of the 
term ``involved in'' when describing the conflict of interest 
protections. To clarify our intent, we are revising this paragraph to 
state ``At a minimum, these standards must ensure that the individuals 
or entities conducting the assessment of functional need and person-
centered service plan development are not * * *.'' As noted above, this 
new language will now be reflected in Sec.  441.555, Support System.
    Comment: A commenter suggested that at Sec.  441.540(c)(4)(i), CMS 
change the language to ``family members, as defined by this section'' 
indicating that as written the language does not provide conflict of 
interest protections to Lesbian, Gay, Bisexual and Transgender 
individuals as there are different types of families that may not fall 
under the definition of ``related by blood and marriage.'' Another 
commenter asked for additional guidance on the exclusion of blood 
relatives, financially responsible relatives, paid caregivers and those 
with a financial interest in provided services from the assessment and 
service plan development processes.
    Response: We do not believe that such revision is necessary, given 
the revision to the regulation text described above.
    Comment: One commenter stated that physician input is necessary and 
indicated that it is not clear whether the proposed rules intend to 
exclude primary care providers (physicians, physician's assistants, 
etc) from the assessment and planning process.
    Response: Nothing in this regulation excludes primary care 
providers from participating in the assessment of functional need or 
the development of the person-centered service plan, as long as the 
requirements of this section are met.
    Comment: Multiple commenters recommended that subpart (e) be 
expanded to read ``the review and revision of the service plan must be 
conducted according to an established timeframe that is explained to 
the consumer.''
    Response: We believe that a person-centered service plan, based on 
a reassessment of functional need, should be conducted at least every 
12 months, at a minimum, to ensure that an individual's needs are 
commensurate to the services authorized in the service plan, as we 
understand that an individual's needs can change significantly over 
time and as a result of various circumstances. We include several 
provisions related to the reassessments and reviews to the service plan 
that we believe capture various circumstances necessitating a 
reassessment and updates to the service plan. Therefore, we do not 
agree that we need to revise the language. While we do not specify in 
regulation a particular timeframe for the review of the service plan 
based on each of the provisions, we expect States to respond to the 
requests for review in a timely manner as specified in paragraph (c).
    Upon consideration of the public comments received, we are 
finalizing Sec.  441.540 with the following revisions:
     We are adding a requirement that the person-centered 
planning process be driven by the individual;
     We are indicating that the scope of the person-centered 
service plan is only required to address the services and supports 
provided under CFC;
     We are consistently using the term ``person-centered 
service plan'' throughout the document;
     We are adding a requirement in paragraph (a) that the 
person-centered planning process must record the alternative home and 
community-based

[[Page 26868]]

settings that were considered by the individual;
     We are adding a requirement in paragraph (b) that the 
person-centered service plan must indicate that the setting in which 
the individual resides was chosen by the individual;
     Paragraph (b)(3) will now say ``reflect clinical and 
support needs as identified through the assessment of functional 
need;''
     We are modifying what is now paragraph (b)(4) to modify 
``desires'' to ``desired outcomes'', to remove the specific examples of 
goals that could be addressed in the person-centered service plan;
     We are modifying what is now paragraph (b)(5) to indicate 
that natural supports should not supplant services and supports 
provided under CFC.
     We are modifying what is now paragraph (b)(6) to require 
all individuals to have an individualized backup plan specified in the 
person-centered service plan;
     We are removing the proposed language at paragraph (b)(8);
     We are modifying what is now paragraph (b)(9) to require 
that the person-centered service plan be finalized and agreed to in 
writing by the individual, and signed by all individuals and providers 
responsible for its implementation;
     We are modifying paragraph (b)(10) to indicate that the 
person-centered service plan must be distributed to the individual and 
others involved in the plan;
     We are revising Sec.  441.540(b)(11) to incorporate the 
service plan requirements for the self-directed model with service 
budget at Sec.  441.550, when applicable;
     We are adding Sec.  441.540(b)(13) to state ``Other 
requirements as determined by the Secretary;''
     We have relocated the language from (c)(1) to the more 
appropriate Support System Sec.  441.555, relocated ``is timely'' from 
proposed (c)(2) to the beginning of paragraph (a)(3), removed the 
duplicative requirements from the proposed paragraph (c)(3) that were 
already captured in Sec.  441.540 (b), revised the language proposed at 
paragraph (c)(4) to state ``At a minimum, these standards must ensure 
that the individuals or entities conducting the assessment of 
functional need and person-centered service plan development are not'', 
and have moved this paragraph to the more appropriate Support System 
Sec.  441.555.
     We have removed paragraph (d) as the requirements in the 
proposed (d) were incorporated in the revised paragraphs (b)(9) and 
(10).
     We have removed paragraph (e) as these requirements are 
now reflected at paragraph (c) with the exception of ``or the 
individual's representative, as applicable'' as this has been removed.

K. Service Models (Sec.  441.545)

    We proposed that a State may choose one or more of the service 
delivery models defined in the statute. We categorized these models 
into two main groups, the Agency Model and the Self-directed Model with 
Service Budget. We proposed to further define the categories within the 
Self-directed Model with Service Budget to include the models specified 
in the statute, including financial management entity, direct cash, and 
vouchers.
    Comment: Many commenters expressed support of the efforts to align 
CFC with Medicaid HCBS programs like section 1915(j) of the Act. Many 
other commenters offered support for the service models described in 
the proposed rule, including allowing States to use multiple service 
models. Many commenters strongly supported the direct cash option and 
the inclusion of financial management activities.
    Response: We appreciate the commenters' support.
    Comment: One commenter noted that in the definition section, Sec.  
441.505, the rule uses the term ``Agency-provider model'' and in Sec.  
441.545 the term ``Agency model'' is used.
    Response: We have revised the rule at Sec.  441.545(a) to make this 
technical correction.
    Comment: One commenter recommended we include the statutory 
language regarding maximized consumer control found at section 
1915(k)(1)(A)(iv)(II) of the Act in the opening language of this 
subpart. The commenter recognizes that it has been incorporated by 
definition into the term ``self-directed'' but considers it important 
here for clarity.
    Response: We appreciate the commenter's perspective, but we do not 
believe such a revision is necessary, as the ``consumer controlled'' 
philosophy is inherent throughout this regulation.
    Comment: One commenter requested that the regulation allow States 
to differentiate service models among populations serviced under CFC.
    Response: Section 1915(k)(3)(B) of the Act requires that services 
must be provided without regard to the individual's age, type or nature 
of disability, severity of disability, or the form of home and 
community-based attendant services and supports the individual requires 
to lead an independent life. When a State specifies what service 
delivery models will be provided under CFC, the model must be available 
to all individuals meeting the medical necessity for CFC services. 
Therefore, States may not target certain service delivery models to 
sub-populations of individuals eligible for CFC. However, States could 
give all individuals participating in CFC the ability to choose among 
more than one service model.
    Comment: Many commenters expressed concern and disagreed with the 
fact that the regulation gives States a choice to provide one or more 
service models. Many commenters believe the proposed rules did not 
carry out the statutory intent that States must offer people with 
disabilities a full range of options (including choice of service 
model) for receiving home and community-based services. The commenters 
believe States should be required to offer both an agency with choice 
as well as a self-directed model with service budget. The commenters 
indicate that a ``choice'' does not exist if the State only offers one 
model. One commenter recommended the regulation require assurances that 
individuals, rather than the State, would have the ability to select 
the service model that is best suited for their specific needs. 
Additionally, the commenters expressed concern that States could choose 
to only provide services under a self-directed model with service 
budget, which would potentially prevent individuals without the 
capacity to self-direct from accessing these services. Similarly, 
States could choose to only select the agency model, which would 
potentially prevent individuals from stating control over the budget 
and prevent them from having control to the maximum extent possible. 
The commenters indicated that either of these alternatives alone is 
inconsistent with the statutory language. The commenters requested the 
regulation be revised to assure that individuals have the opportunity 
to select the service model that best meets their needs. Another 
commenter believed States should not be allowed to have one model of 
care because one model will not fit all participants. The commenter 
stated that limiting the service delivery model is counter to the 
purpose of section 1915(k) of the Act and would only serve to 
perpetuate discrimination against individuals who can safely live in 
their own homes.
    Response: The commenters provided compelling arguments as to why a 
State should provide more than one service delivery model. However, 
section 1915(k)(A)(iii) of the Act requires that the State shall make 
available home and community-based attendant services and supports 
``under an agency-provider

[[Page 26869]]

model or other model * * *.'' The use of the word ``or'' instead of 
``and'' led us to interpret the requirement that States are given a 
choice of service model to offer. We agree that individuals should be 
given a choice of service model that best meets their needs and we 
encourage States to elect to provide more than one. However, based upon 
the statutory language, we do not believe we have the authority to 
mandate a State to offer both service models.
    Comment: A few commenters indicated that it is not clear what 
models would be included in the agency-provider model. In addition to 
requiring States to offer more than one service delivery model, a few 
commenters also requested the regulation specify the additional 
delivery models to be provided, such as traditional agency model, 
agency with choice model and self-direction with a service budget.
    Response: We would like to clarify that, for the purposes of CFC, 
the agency-provider model could include both the traditional model and 
the agency with choice model. States using the agency-provider model 
for CFC may choose one or both of these agency options. As noted in the 
response to comments received in the Definition section, we have 
modified the definition of agency-provider model. Therefore, we have 
also revised the language at Sec.  441.545 to align this section with 
the revised definition.
    Comment: One commenter believed that mandating all models would not 
only allow a wider range of eligible individuals the opportunity to 
access services, but could potentially be of benefit to the growing 
personal care workforce. The commenter acknowledged the value of self-
directed models, but also expressed the belief that it can isolate 
attendant care providers and offer them little opportunity for 
advancement. If the person they care for passes away or is 
hospitalized, the attendant care providers have no assurance of 
continued work. Payment for travel costs and holidays, which is 
standard in agencies, is almost non-existent for attendant care 
providers participating in self-directed models. Working for an agency 
may guarantee continued work, ongoing professional training or support, 
and recourse for addressing employment problems.
    Response: We appreciate the commenter's perspective, and as stated 
earlier, encourage States to offer more than one service delivery 
model. However, we do not believe the statute mandates the provision of 
more than one service delivery model. Additionally, the scope of this 
regulation does not extend to address advancement opportunities and the 
examples of employees benefits the commenter provided.
    Comment: One commenter stated that attendant services and supports 
should be available to individuals whether or not the individual fully 
manages them. The commenter requested that we use the term ``consumer 
controlled'' instead of ``self-directed'' when talking about the 
agency-provider model.
    Response: We agree that individuals should exercise the level of 
control they want to, and we believe the self-direction philosophy 
supports this flexibility. As indicated above, we have modified the 
definition of ``agency-provider model'' to remove the term ``self-
directed'', to avoid confusion.
    Comment: One commenter requested that we clarify how an agency-
provider model can legally provide participants with ``hiring and 
firing authority'' of personal care attendants, if attendant care 
providers are employees of the agency. Another commenter requested we 
clarify the definition of agency model within the context of consumer 
direction.
    Response: We would like to clarify that the hiring and firing 
authority in the agency-provider model grants individuals the choice of 
who will provide services to them. When an individual chooses to not 
continue to use a attendant care provider (that is, ``fire'' the 
attendant care provider), the attendant care provider is still employed 
by the agency and is available to provide services to someone else. As 
indicated in an earlier response we have replaced references to 
``hire'' and ``fire'' with ``select'' and ``dismiss''.
    Comment: One commenter wanted to know if an individual's 
representative assisting the individual to self-direct and manage their 
services can be paid as part of the service plan.
    Response: The assistance provided to a participant by an authorized 
representative is not considered a CFC service, and therefore, there is 
no reimbursement available through CFC.
    Comment: One commenter indicated that the services available 
through the CFC program are provided in most States as adult day, home 
care and PACE, under different authorities such as sections 1915(c), 
1915(b), 1115, 1915(i), and 1905(a) of the Act. The commenter 
recommended the regulation be amended to allow these providers to 
participate in the CFC program. One commenter suggested that the final 
regulation indicate that voluntary participation by PACE programs as a 
provider under CFC is allowed under the agency model or under another 
model established by the State.
    Response: We do not agree the regulation should specify the various 
provider types that may be allowed to provide CFC services. The State 
determines the provider qualifications for providers to provide CFC 
services under the agency provider model. If the provider types listed 
meet the State's qualifications, and the providers are willing to 
provide the service, they may do so.
    Comment: We received many comments requesting clarification on the 
level of control individuals have under the agency service model. One 
commenter indicated the regulatory language pertaining to the agency 
service delivery model is ambiguous. Section 441.545(a)(2) provided 
that under the agency model for CFC, individuals maintain the ability 
to hire and fire the providers of their choice. The commenter indicated 
that this can be read to mean individuals under this model only have 
the ability to hire and fire providers and do not have maximum control 
over service delivery, as required by the statute in section 
1915(k)(6)(B) of the Act. The commenter recommended that this 
regulation be amended to make the language in Sec.  441.550, relating 
to the authority of the individual to control service delivery, 
compliant with their interpretation of the statute.
    Response: We do not agree with the commenter. When services are 
provided under the agency-provider model, individuals have maximum 
control within that service delivery model to select and dismiss 
attendant care providers, provide input as to the provision of 
services, and the type of assistance the attendant care provider 
provides. The individual also retains the right to train attendant care 
providers to perform the needed assistance in a manner that comports 
with the individual's personal, cultural, or religious preferences.
    Comment: A few commenters requested that the regulation require 
that under the agency model, the individual maintain the ability to do 
the following: Select providers of their choice for services identified 
in their person-centered service plan, train, supervise, schedule, 
determine duties, fire their attendants, manage their providers and 
control, to the maximum extent possible, the services identified in 
their person-centered service plan.
    Response: We believe the regulations include these requirements.

[[Page 26870]]

    Comment: One commenter indicated that it is not clear if 
``provider'' means agent, attendant or something else.
    Response: For purposes of CFC, provider means any individual or 
entity providing a CFC service and/or support.
    Comment: One commenter indicated that the statute calls for 
``consumer-controlled'' services, regardless of the model utilized. The 
methods for adhering to this philosophy are clear with the self-
directed model, but less clear within the agency-provider model.
    Response: We would like to clarify that the agency-provider model 
(which States could choose to implement through a traditional agency 
model and/or an agency-with-choice model) also adheres to the 
philosophy of ``consumer-controlled.'' Under this model, individuals 
retain the ability to select, dismiss, and manage their attendant care 
provider.
    Comment: A few commenters recommended that the rule ensure that the 
scope and authority it provides for the consumer's ``hiring and 
firing'' of the attendant care provider are complementary, appropriate 
and in sync with the agency's business and employment model, all 
applicable agency regulations, and basic employee protections. The 
regulation should include a clear delineation of the roles and 
responsibilities of the consumer and the agency under this model.
    Response: We do not believe it is necessary to include such 
specificity in the regulation, as it will vary by service delivery 
model and should be developed by the State. We believe there are 
sufficient requirements in the regulation to ensure all parties 
understand their basic roles and responsibilities. We also reaffirm 
that the individual's ability to ``fire'' their attendant care provider 
in no way affects the attendant care provider's employment status with 
the agency. We reiterate that we have replaced references to ``hire'' 
and ``fire'' with ``select'' and ``dismiss.''
    Comment: One commenter indicated that the agency service model can 
``muddy the water'' for self-direction. The commenter recommends a 
consulting system, where an individual can receive any assistance 
needed to perform employer duties, such as hiring, training, and 
paperwork.
    Response: We agree with the commenter's suggestion that individuals 
receive assistance needed to perform employer duties and believe these 
protections are included in the Support System section. Therefore, we 
have revised the Support System requirements at Sec.  441.555 to apply 
to all individuals receiving CFC regardless of the service delivery 
model. We describe these revisions further in Sec.  441.555.
    Comment: Many commenters supported the provision in the Person-
Centered Service Plan section of CFC that required that the Plan ``be 
directly integrated into self-direction where individual budgets are 
used'', but noted that it was unclear why the use of service budgets 
across all models is not assumed, given the language proposed in the 
section, ``Service Budget Requirements'' (Sec.  441.560). The 
commenters supported the use of service budgets in all models (since 
such a process ensures transparency and allows participants to have 
meaningful control over their services). The commenters requested that 
CMS reconsider the proposal for a separate section, ``Service Plan 
Requirements for Self-Directed Model with Service Budget'' (Sec.  
441.550), as the Person-Centered Service Plan section should address 
the requirements for assuring true participant direction, regardless of 
the model chosen. The commenters pointed out that this is consistent 
with the expectation set forth by the CFC statute requiring CFC be 
``consumer-controlled,'' regardless of the models chosen. The 
commenters added that while they recognize that basic elements of the 
person-centered service plan may be implemented differently based on 
the model, there should be core expectations for assuring participant 
direction across the models, and that models should be chosen based on 
appropriateness for the State, not based on presumptions relative to 
cost associated with fewer or less requirements.
    Response: Every individual participating in CFC is expected to have 
a person-centered service plan that is based on an assessment of 
functional need regardless of the service delivery model available in 
the State. The service plan requirements for the self-directed model 
with service budget include the additional requirements that must be 
met when an individual is directing services through this model. We do 
not agree that service budgets should be a component of every service 
delivery model, as service budgets are not used in the agency-provider 
model.
    Comment: We received many comments requesting that the regulation 
specify the various types of service delivery models that may be 
included under the ``other'' category. One commenter requested the 
regulations not restrict the statute's open-ended ``other'' category to 
only those models that feature a service budget component. A few 
commenters requested the regulation clarify that a collective 
bargaining model, which provides consumers the ability to select, 
direct and dismiss their own caregiver, while giving States the ability 
establish work-force wide compensation standards is an acceptable 
``other model.'' Many commenters requested the CFC rules be designed so 
that all States with public authorities can fully participate in all 
aspects of CFC without undermining their successful policy approaches 
for expanding and stabilizing the workforce available to these 
consumers. In particular, the commenters requested that the regulation 
clarify that compensation setting and other workforce-related 
activities by the State be consistent with all allowable service models 
under CFC. The commenters indicated that difficulties finding and 
retaining quality home care attendant care providers are among the 
significant impediments to the expansion of attendant care programs, 
and CMS should ensure that the CFC regulation does not undermine these 
State activities but encourages such activities.
    Response: We do not believe it is necessary to specify in 
regulation every type of service delivery model that exists, as we do 
not believe we would be able to capture them all. States wishing to 
utilize ``other models'', as defined in Sec.  441.505, would need to 
include a description of the proposed service delivery model in their 
CFC SPA. We will discuss these models with the State, and a 
determination will be made as to whether it is an appropriate service 
delivery model for CFC.
    We are taking this opportunity to add a new paragraph (c), to 
indicate that States have the ability to propose an alternative service 
delivery model not envisioned in this regulation. Such a model would be 
described in the State's CFC SPA, and approved by CMS.
    Comment: One commenter requested the regulation be amended to add a 
provision that enables States to take on responsibility for building a 
self-directed workforce sufficient to meet the goals of the program by 
ensuring adequate compensation for direct care attendant care 
providers, establishing a consumer workforce for direct care attendant 
care providers, and implementing data systems to monitor the direct 
care attendant care providers.
    Response: We do not believe it is within the scope of this 
regulation to mandate such activities. We believe that States have the 
ability to implement such requirements and should discuss them with the 
Development and Implementation Council.
    Comment: One commenter is very appreciative of the broad language 
allowing individuals to choose their

[[Page 26871]]

attendant, establish additional cultural competency requirements, and 
train attendants to their specific cultural competency requirements. 
The commenter expressed that this flexibility is particularly important 
to ensuring service provision to Lesbian, Gay, Bisexual and Transgender 
(LGBT) individuals, especially older LGBT adults and people of color.
    Response: We appreciate the commenter's support.
    Comment: One commenter requested we clarify whether CMS perceives 
self-direction delivery models approved under different Federal 
authorities to be vulnerable to allegations of inequitable access under 
provisions of the Americans with Disabilities Act.
    Response: The Americans with Disabilities Act requires that 
individuals with disabilities be given the ability to receive their 
long-term care services and supports in the most integrated setting 
appropriate to their needs. We believe that Medicaid authorities 
allowing for self-direction of services and supports do not conflict 
with this mandate, as self-direction is a service delivery model, and 
does not prevent the provision of additional services, through Medicaid 
or other authorities, that may be necessary for a State to comply with 
the Americans with Disabilities Act.
    Comment: One commenter requested that the regulation clarify 
whether a State may select a self-direction model under the authority 
of section 1915(k) of the Act that differs from the State's existing 
self-direction delivery models under HCBS 1915(c) waivers.
    Response: While there are many similarities between the section 
1915(k) authority and the self-direction delivery models under the 
section 1915(c) authority, these are separate authorities with 
different requirements. States may implement different self-direction 
models under sections 1915(c) and 1915(k) of the Act, as long as all 
program requirements are met.
    Comment: One commenter indicated that it is unclear if the direct 
cash model is intended to be a stand-alone model or an option within 
the financial management entity.
    Response: Section 441.545(b)(1) requires a State to make financial 
management services available to all individuals with a service budget. 
States can separately choose to allow cash disbursement to individuals 
self-directing CFC services. Individuals using the direct cash option 
have the choice of using the financial management entity for some or 
all of the relevant functions.
    Comment: One commenter recommended the regulation specify when FFP 
is drawn down under the direct cash option and how unexpended portions 
of a cash disbursement should be treated.
    Response: Cash disbursement is given prospectively. States would 
report expenditures for CFC services on the CMS 64 form based on this 
prospective disbursement. States may determine how to account for 
unexpended portions of cash disbursements. Based on past experience, we 
know that some States recoup unexpended funds; others allow 
beneficiaries to carry over unexpended funds into subsequent months.
    Comment: One commenter requested clarification on the requirement 
to comply with Internal Revenue Service rules contained under each 
service model. The commenter also requested clarification on how these 
paragraphs relate to the requirements in the State assurance provisions 
in Sec.  441.570. The commenter suggested the regulations be clarified 
to ensure that the requirements of Sec.  441.570 apply to each of the 
service models listed in Sec.  441.545, as required by the statute.
    Response: While the language pertaining to meeting IRS requirements 
may seem duplicative, the entity responsible for ensuring the 
requirement is met differs depending on the service delivery model 
used, and whether an individual is utilizing financial management 
activities. We believe the regulation is clear that requirements under 
the State Assurance sections apply to all service delivery models.
    Comment: We received several comments supporting the inclusion of a 
financial management entity and the specific requirements for the 
service.
    Response: We appreciate the commenters' support.
    Comment: One commenter indicated that given the participant 
direction requirement of CFC, it may be important for CMS to consider 
whether or not a financial management entity could also be used within 
an Agency with Choice and other agency-provider models. The commenter 
added that the regulation does not provide specificity as to whether 
the financial management entity would operate on behalf of an 
individual who would be the employer of his or her attendants, or if a 
financial management entity could be an Agency with Choice, wherein the 
agency is the official employer of attendant care providers who provide 
service to participants.
    Response: It is unclear how a financial management entity would be 
utilized in an agency-provider model. However, we would be willing to 
discuss such a proposal with States.
    Comment: Two commenters suggested the regulation require States to 
offer more than one choice of financial management entity, and 
recommended the term ``entity'' be changed to ``entities.''
    Response: Section 1915(k) of the Act does not provide the authority 
to require States to provide more than one choice of financial 
management entity, as this is an administrative function that may be 
completed by the State or a vendor organization. However, the statute 
does not prohibit States from having more than one financial management 
entity if they choose to. We believe offering more than one entity is 
congruent with the philosophy of consumer choice and encourage States 
to consider allowing more than one financial management entity.
    Comment: One commenter recommended that Sec.  441.545(b)(1)(iii) be 
amended to say ``separately track budget funds and expenditures for 
each individual.'' The commenter believes this revision is necessary 
because States may interpret ``separate account'' to mean ``separate 
bank account'' which is an overly complex, costly and unnecessary 
approach to managing an individual budget.
    Response: The intent of this provision is to eliminate the 
possibility of commingling of individuals' budget funds. We have 
revised the rule to incorporate the suggested language and also added 
the requirement for the financial management entity (FME) to separately 
maintain budget funds. Additionally, we have revised paragraph (b)(vi) 
to clarify that the FME is required to provide periodic reports of 
expenditures to the individual and State.
    Comment: One commenter suggested revising Sec.  441.545(b)(2)(I) to 
also require filing and reporting FICA, FUTA and State unemployment 
taxes.
    Response: We believe the regulation already specifies these 
functions, as we interpret ``compliance with'' to encompass filing and 
reporting. However, we are taking this opportunity to add ``and State 
employment and taxation authorities'' after requiring compliance with 
all applicable requirements of the IRS.
    Comment: One commenter recommended that communications between the 
FME and the individual occur at least monthly.
    Response: We believe the frequency of communication between the FME 
and the individual should be established by the State and should be 
based upon the level of assistance needed and provided.

[[Page 26872]]

    Comment: One commenter wanted clarification as to whether the cost 
of the FME is considered a service cost rather than an administrative 
cost. The commenter also wanted to know if this service may be included 
in an individual's service budget.
    Response: Consistent with other authorities including services 
provided by a financial management entity, this is considered an 
administrative function and may not be included in the individual 
service budget.
    Comment: One commenter suggested the regulation should recognize 
fiscal intermediaries and include language that those entities that 
have been approved to serve a similar role under a State program should 
be automatically approved or allowed a streamlined approval process to 
provide similar services under CFC.
    Response: Section 441.545 sets forth the minimum mandatory 
functions that must be performed by the FME. We recognize that States 
may interpret ``fiscal intermediaries'' differently. Additionally, we 
do not believe that fiscal intermediaries are synonymous with fiscal 
management activities. Therefore, we do not believe it is appropriate 
to list fiscal intermediaries in the regulation; however, we note they 
could provide the functions set forth in Sec.  441.545, as determined 
by the State.
    Comment: One commenter recommended the regulation clarify whether 
FME activities must be provided if a State does not elect to offer 
direct cash, vouchers, or permissible purchases.
    Response: Section 441.545(b)(1) requires a State to make financial 
management activities available to all individuals with a service 
budget, including when the direct cash option is used. We are modifying 
paragraph (b)(3) to clarify that the requirements at Sec.  
441.545(b)(2)(i) through (iv) also apply to vouchers. Accordingly, we 
are removing ``If the cash option is the only model offered by the 
State for Community First Choice'' and ``services under the cash 
option'' from paragraph (b)(2)(iv) as we want to be clear that this 
provision applies to both direct cash and vouchers. States only 
implementing CFC through an agency-provider model would not need to 
provide FME activities.
    Comment: One commenter recommended that a financial management 
entity be available for all self-directed model options. In such cases, 
the role of the financial management entity within each of the models 
would need to be clarified.
    Response: Section 441.545(b)(1) requires a State to make financial 
management activities available to all individuals with a service 
budget. States can separately choose to allow cash disbursement or 
vouchers to individuals self-directing CFC services. Individuals using 
the direct cash option have the choice of using the financial 
management entity for some or all of the relevant functions. We believe 
these requirements ensure sufficient access to financial management 
entities.
    Comment: One commenter stated that education on the 
responsibilities of managing cash when an FME is not used is key. 
Specifically, States and individuals should be educated on the risks 
associated with not using a financial management entity and the 
consequences of mismanaging the duties required.
    Response: We agree with the commenter and believe the requirements 
under Sec.  441.555, Support System, will provide individuals with the 
necessary education.
    Comment: One commenter recommended the regulatory citations for 
service models be reorganized so that all the information pertinent to 
the agency model is together and the self-direction requirements are 
all together.
    Response: As indicated earlier, we have revised the Support System 
language at Sec.  441.555 to indicate that it applies to all service 
delivery models. We believe this addresses this commenter's suggestion.
    Upon consideration of public comments received, we are finalizing 
Sec.  441.545 with revision, revising paragraph (a) to refer to the 
``agency-provider model'', amending paragraph (a)(1) to align with the 
revised agency-provider model definition, amending paragraph 
(b)(1)(iii) to say ``separately track budget funds and expenditures for 
each individual'', amending paragraph (b)(1)(vi) to require the FME to 
provide periodic reports of expenditures to the individual and to the 
State, amending paragraph (b)(2)(i) to specify compliance with State 
employment and taxation authorities, removing ``If cash option is the 
only model offered by the State for Community First Choice'' and 
``services under the cash option'' from (b)(2)(iv), modifying paragraph 
(b)(3) to make the requirements at Sec.  441.545(b)(2)(i) through (iv) 
apply to vouchers, and adding a new paragraph (c) to permit States to 
propose other service delivery models.

L. Service Plan Requirements for Self-Directed Model With Service 
Budget (Sec.  441.550)

    We proposed that the self-directed service plan requirements convey 
authority to the individual to recruit, hire (including specifying 
attendant care provider qualifications), fire, supervise, and manage 
attendant care providers in the provision of CFC services and supports. 
In addition, we proposed that the service plan describe the ability of 
the individual to determine the amount paid for a service, support, or 
item, as well as the ability to review and approve provider invoices.
    Comment: Many commenters offered general support of the self-
direction model with service budget. The commenters believe the intent 
of this section is to give people maximum control over their services, 
recognizing that giving individuals the authority to manage their 
service provider is integral for self direction.
    Response: We appreciate the commenters' support.
    Comment: One commenter requested more specificity regarding the 
requirement for individuals to evaluate an attendant care provider's 
performance found at Sec.  441.550(d)(4). Specifically, the commenter 
suggests that we explain the purpose of the evaluation, who will 
deliver and receive the evaluations, and what actions are to be taken 
in response to the evaluations. This commenter also questioned whether 
evaluations are required if the recipient is the spouse of the 
provider, or a minor with a parent provider. Alternatively, one 
commenter offered support of the evaluation requirement, but requested 
the rule not allow States to impose formal or standard evaluation 
processes. The commenter believes that the method for evaluation should 
be the decision of the employer.
    Response: Individuals receiving services under the self-directed 
model with service budget have the ability to supervise and manage 
attendant care providers providing services to them. We expect 
individuals to evaluate the quality and adequacy of services the 
attendant care provider provides as part of their supervision 
responsibilities. We do not expect that the evaluation has to be a 
formal process, nor is it the responsibility of the State to impose a 
standard evaluation process. The purpose of the evaluation is to 
provide the individual with the opportunity to provide feedback to the 
attendant care provider with regard to the provision of services. When 
the individual has a representative, the representative would be 
expected to conduct the evaluation.
    Comment: Many commenters expressed support of the self-directed 
service plan requirements. The commenters believe the requirements are 
essential to meaningful self-directed models of care and encourage 
their inclusion in the final regulation.

[[Page 26873]]

    Response: We appreciate the commenters' support.
    Comment: One commenter requested we clarify whether the State is 
allowed to set parameters or limits on any of the following: Annual 
service budget amount, the number of paid attendant care hours received 
from any single family member within a time period (per week, month, 
etc), or minimum wages.
    Response: CFC is an optional State plan service. As such, States 
may set limits on the amount duration and scope of CFC benefits, as 
long these limits comply with the CFC specific requirements set forth 
in statute and regulation. We will be reviewing all State proposals to 
implement CFC under the State plan. Our review includes a review of any 
proposed limitations.
    Comment: Many commenters expressed concern with individuals 
determining the amount to pay for a service, support, or item. Many 
commenters indicated that States should be allowed to establish 
reimbursement rates and methodologies including the use of collective 
bargaining as a way to establish consistent reimbursement rates for 
services and supports, while still allowing the individual to determine 
the amount, duration, and scope of the services provided. One commenter 
recommended the regulation be amended to specify that when an 
individual is determining the amount to pay for a service, support or 
item, the individual's decision should be consistent with existing 
State laws and regulations governing compensation standards. Another 
commenter indicated that while individuals should appropriately review 
invoices, requiring that individuals determine payment for attendant 
services (hourly rate or wages) is not a necessary component of self-
direction and could undermine States' efforts to build their long-term 
services attendant workforce through regulating compensation standards 
for attendants/direct care attendant care providers. Another commenter 
requests the elimination of the requirement that individuals in a self-
directed model with service budget determine the amount paid for a 
service, support, or item.
    Response: We understand the concern expressed by these commenters. 
The intent of CFC is to provide individuals with the opportunity to 
maximize their independence and control of the home and community-based 
attendant services and supports. An integral component of the self-
directed model with service budget is the ability of the individual to 
determine the amount paid for services. However, this flexibility 
should not conflict with responsibilities for setting compensation 
according to State and Federal requirements. Therefore, we are 
modifying Sec.  440.550(e) to specify that determining the amount to 
pay for services should be ``in accordance with State and Federal 
compensation requirements''.
    Comment: One commenter expressed concern related to the requirement 
that ``the budget methodology include calculations of the expected 
costs of CFC services and supports if those services and supports were 
not self-directed.'' The commenter believes States will find this 
provision challenging since it asks them to compare two separate models 
that are not necessarily directly comparable.
    Response: We do not agree with the commenter. We expect the State 
to obtain this information based on an analysis of historical costs and 
utilization and other factors that are likely to affect costs.
    Comment: One commenter requested that we provide clarification 
around budgeting requirements, specifically whether individual 
budgeting is required.
    Response: The service budgeting requirements are used when 
individuals are receiving services under the self-directed model with a 
service budget. The budget is developed based on an individual's 
assessment of functional need and the services specified in the person-
centered service plan.
    Comment: The commenter indicated that the proposed rule gives the 
appearance that the self-directed model is more costly and onerous to 
implement than agency-provider models.
    Response: CMS encourages States to avail themselves of a variety of 
service models to implement CFC. We acknowledge that agency-provider 
models are more straightforward to implement, and likely are already in 
existence in most States. However, we fully recognize the merits of 
self-directed service models, and will work with any State interested 
in adopting a self-directed service model for CFC.
    Comment: One commenter recommended that the rule be revised to add 
language stating that the attendant care provider's duties are 
identified in the approved self-directed service plan and within the 
scope of CFC services.
    Response: It is the person-centered service plan, required for each 
individual receiving CFC services and supports, regardless of service 
delivery model, that would convey the duties of the attendant care 
provider in accordance with the scope of CFC. We do not believe that it 
is necessary to amend this section of the rule to additionally make 
these points.
    Comment: One commenter stated that with regard to ``reviewing and 
approving provider invoices or timesheets'' attendant care providers 
must utilize timesheets per the Fair Labor Standards Act (rather than 
invoices). The commenter recommended revising the rule to say 
``Reviewing and approving provider payment requests.''
    Response: We agree with the commenter and have revised the rule at 
Sec.  441.550(f) to say ``reviewing and approving provider payment 
requests.''
    Upon consideration of the public comments received, we are 
finalizing Sec.  441.550 with revision, modifying paragraph (e) to 
specify that determining the amount paid for services should be ``in 
accordance with State and Federal compensation requirements'', 
modifying paragraph (f) to specify ``reviewing and approving provider 
payment requests.'' As noted in the response to comments received in 
the Definitions section, we modified paragraphs (a) and (b) to use the 
terms ``dismiss'' and ``select.''

M. Support System (Sec.  441.555)

    Based on our experience with self-direction programs, we are aware 
that the support system provided by the State is a critical element of 
the service delivery model. Therefore, to maintain consistency and to 
reflect our policy relating to self-direction, in Sec.  441.555 we 
proposed the requirement that the State have in place a support system 
to facilitate successful self-direction by the individual. While we did 
not prescribe the way States are to design their support system, to 
allow flexibility, based on our experience, we included a minimum list 
of activities for which individuals may need information, counseling, 
training, or assistance, but States may offer additional activities. 
Generally, the activities requiring support include participant rights 
information and how the self-directed model of service delivery 
operates.
    Comment: We received several comments providing overall support for 
the requirements set forth at Sec.  451.555. One commenter strongly 
endorsed this section as a critical component to ensuring consumers 
achieve maximum independence.
    Response: We appreciate the commenters' support.
    Comment: A few commenters suggested that we extend paragraph (b)(1) 
to require communication in a linguistically and culturally appropriate

[[Page 26874]]

manner, with accommodations for all functional limitations, including 
the need for alternative formats.
    Response: For a State to comply with this requirement, it is an 
expectation that the State will assure that information is provided to 
individuals in a manner that is culturally sensitive and at a level 
most appropriate for the individual to understand the information. This 
includes translator services as needed for non-English speaking 
participants and interpreter services and accommodations for 
individuals with sight or hearing impairments. We agree with the 
commenter's recommendation and have revised paragraph (b)(1) to include 
the following language: ``To ensure that the information is 
communicated in an accessible manner, information should be 
communicated in plain language and needed auxiliary aids and services 
should be provided.''
    Comment: One commenter requested that we provide guidance on all 
conditions that are required for person-centered planning with a 
service budget to better determine the cost of participating.
    Response: The requirements for person-centered planning are the 
same regardless of the service delivery model and are described at 
Sec.  441.540. Additionally, the requirements set forth at Sec.  
441.560 must be met for individuals receiving services through the 
self-directed model with a service budget.
    Comment: One commenter indicated that, with regard to risk 
management agreements required under paragraph Sec.  441.555(b)(2)(xi), 
the regulation does not address whether criminal history record checks 
are permitted to help mitigate risk. The commenter questioned whether 
record or background checks would be allowed if the participant 
recruits, hires, trains and fires attendant care providers. The 
commenter requested CMS to clarify whether States are required to allow 
participants to hire someone who presents a risk of harm.
    Response: Following the practice of other programs offering self-
direction, we believe that criminal background checks of attendants 
should be left to the discretion of the States. However, we agree that 
this expectation was not clear in the proposed regulation.
    While we will not prescribe the tools or instruments States should 
use when developing risk management agreements, we are revising Sec.  
441.555 to require States to specify any tools or instrument it uses to 
mitigate identified risks. In this section, we further add that if 
States make criminal or background checks a requirement, States would 
bear the expense of the background checks it performs on behalf of 
individuals participating in CFC.
    Additionally, we believe that the individual must retain the 
authority to decide who to hire to provide personal attendant services, 
as this decision is inherent in self-direction, as long as the choice 
adheres to section 1903(i) of the Act that Medicaid payment shall not 
be made for items or services furnished by individuals or entities 
excluded from participating in the Medicaid Program.
    Comment: One commenter requested that we consider giving States the 
option to make self-directed training mandatory to ensure that 
individuals have mastered the skills needed to manage the service 
budget.
    Response: We do not agree with the commenter. Section 441.555(b) 
requires States to provide or arrange for the provision of appropriate 
information, counseling, training and assistance to ensure that an 
individual is able to manage the services and budget. These supports 
are to be available to the individual on a continuous basis until such 
time as it has been demonstrated that after additional counseling, 
information, training or assistance the individual cannot effectively 
manage self-direction responsibilities.
    Furthermore, Sec.  451.555(b)(2)(v) requires there to be a 
discussion about the risks and responsibilities of self-direction. We 
believe these protections are sufficient to facilitate successful 
provision of services and supports via a self-directed model with 
service budget.
    Comment: One commenter asked if the entity providing the support 
system could also be the financial management entity.
    Response: Such an arrangement would be appropriate, as long as the 
conflict of interest protections originally proposed in Sec.  
441.540(c)(4)(iv), and now relocated to this section, are met.
    Comment: One commenter requested clarification as to whether the 
State's obligation is limited to providing information about existing 
advocacy systems or if there is an expectation that States actively 
invest in fostering development of advocacy systems for the CFC option.
    Response: It is an expectation that States would provide 
information about existing advocacy systems. We are not mandating the 
establishment of additional systems specific to the CFC program.
    Comment: One commenter recommends that paragraph (b)(2)(vii) be 
revised as ``Individual rights, including appeal rights.''
    Response: We agree with the commenter and have revised the rule at 
Sec.  441.555(b)(2)(vii) to say ``individual rights, including appeal 
rights.''
    Comment: One commenter expressed concern that the regulatory 
language requiring States to provide assistance to define goals, needs 
and preferences in paragraph (b)(2)(ix) exceeds current program limits 
and could overpower existing systems. The commenter recommends States 
have the ability to define this within current program abilities and 
limits.
    Response: We do not agree with the commenter that States be given 
the ability to define support activities within the States' current 
program abilities. While similar to existing authorities, CFC is not 
the same. We are clarifying that this requirement relates to the 
provision of CFC. Therefore we have revised the rule at Sec.  
441.555(b)(2)(ix) to say ``Defining goals, needs and preferences of 
Community First Choice services and supports.''
    Comment: Several commenters expressed concern that the regulation 
only applies supports to the self-directed model population. The 
commenters indicated that some of these supports may also be relevant 
and important to individuals participating in the agency model. The 
commenter recommends extending the relevant support requirements to 
that population.
    Response: We recognize that although participants may not control 
an individualized budget in the agency-provider model, participants may 
manage their services to the maximum extent possible. We agree with the 
commenters that the supports provided under this section apply to all 
service delivery models, not just the self-direction model with a 
service budget. Therefore, we have revised the rule to include language 
that applies this requirement to all service delivery models.
    Comment: We received many comments suggesting States be encouraged 
to develop attendant care provider registries as part of the additional 
activities they undertake to support a self-directed model of service 
delivery. A few commenters expressed concern that individuals who do 
not choose to receive services through an agency may have difficulty 
locating direct-care attendant care providers outside of their 
immediate network of family members and contacts. The commenters 
indicated that a ``matching service registry'' is a labor market 
intermediary that creates a dynamic platform for matching supply and 
demand by allowing individuals to tap into an up-to-date bank of 
available

[[Page 26875]]

attendant care providers. The commenters also indicated that the 
attendant care providers can also alert participants of their 
availability for employment. These commenters recommended the 
regulatory language be revised to require States to establish a labor 
market intermediary such as a matching service registry to assist 
participants with identifying and accessing independent providers.
    Response: We believe States should have the flexibility to design a 
system that would best address workforce issues and ensure access to 
providers in their States. We support State activity to implement 
systems that will improve an individual's access to attendants. However 
we believe it is beyond the scope of the regulation to mandate that 
States implement attendant care provider registries.
    Comment: A few commenters suggest we add ``peer supports'' to the 
list of included support activities. Another commenter suggested that 
the regulation promote the use of local, peer-based and consumer 
controlled providers so beneficiaries have maximum access to their 
fiscal agent.
    Response: We do not agree with the commenters that ``peer support'' 
services should be added to the list of support activities. For 
purposes of Medicaid, peer support services are an evidence-based 
mental health model of care that assists individuals with their 
recovery from mental illness and substance use disorders. We recognize 
that peer support is provided by specially trained individuals who are 
in recovery from mental illness and/or substance use services. As such, 
we believe it would create confusion to include ``peer supports'' as a 
CFC service.
    Recognizing that individuals with experience in utilizing personal 
attendant services and supports could provide valuable assistance to 
individuals who desire to do the same, States could utilize individuals 
who were or are receiving such services in the implementation of the 
activities required under the Support System.
    Comment: One commenter recommends deleting paragraph (b)(2)(xi), 
pertaining to risk management agreements. The commenter compares such 
agreements to managed risk agreements in assisted living facilities 
that are inappropriate and illegal to the extent that they purport to 
release a service provider from liability. The commenter indicated 
consumer law invalidates any agreement that would absolve a personal 
care provider from responsibility for his or her actions.
    Response: We disagree with the commenter, as we do not believe the 
risk management agreement requirement absolves personal care providers 
from responsibility for his or her actions. We believe the purpose of 
the risk management agreement is to identify the risks that an 
individual is willing and able to assume, and the plan for how 
identified risks will be mitigated. The State must ensure that the risk 
management agreement is the result of discussion and negotiation among 
persons providing the support system functions, the individual, and 
others from whom the individual may seek guidance. This is a 
requirement under the person-centered service plan.
    Comment: One commenter suggested that the regulation be revised at 
Sec.  441.555(b)(2)(vi) to state ``The ability to freely choose from 
available home and community-based attendant providers, service 
delivery models and (if applicable) financial management entities.''
    Response: We agree with the commenter, but must acknowledge that 
States have the choice of how many service delivery models to provide. 
Therefore we have revised Sec.  441.555(b)(2)(vi) to state ``the 
ability to freely choose from available home and community-based 
attendant providers, available service delivery models and if 
applicable, financial management entities.''
    Comment: One commenter requested that we clarify the vision for 
ensuring development of a conflict free support system, as alluded to 
in the preamble, in the service plan discussion. The commenter 
indicated the proposed rule contains no such language or guidance.
    Response: The conflict free support system discussed in the 
preamble is operationalized by a State's adherence to the language 
proposed in Sec.  441.540(c)(4), which has now been relocated to this 
section.
    Comment: One commenter indicated that to avoid conflict with 
standard language referring to contracts, the word ``plan'' should be 
substituted for the word ``agreement'' in paragraph (b)(2)(xi): 
development of risk plans.
    Response: We do not agree with the commenter's suggestion. We 
believe the use of the term ``agreement'' most accurately reflects that 
these strategies are the result of discussion and negotiation required 
under the person-centered plan development.
    Comment: One commenter requested that the regulation include 
support system workforce competencies.
    Response: We disagree with this suggestion, as we believe States 
should have the flexibility to determine the qualifications of the 
entities conducting the assessment of functional need and developing 
the person-centered service plan, provided all requirements of this 
regulation are met.
    Comment: One commenter indicated that individuals may need ongoing 
education and guidance from the self-direction support system.
    Response: We agree with the commenter, and believe that this 
ongoing support is provided for.
    Upon consideration of the public comments received, we are 
finalizing Sec.  441.555 with the following revisions:
     We are revising paragraph (b)(1) to include the following 
language: ``To ensure that the information is communicated in an 
accessible manner, information should be communicated in plain language 
and needed auxiliary aids and services should be provided.''
     We are adding a requirement at paragraph (b)(2)(xi) that 
States specify any tools or instruments it uses to mitigate identified 
risks, and adding that if States make criminal or background checks a 
requirement, States would bear the expense of the background checks it 
performs on behalf of individuals participating in CFC;
     We are revising paragraph (b)(2)(vii) to include 
``individual rights, including appeal rights'';
     We are revising paragraph (b)(2)(ix) to state ``Defining 
goals, needs and preferences of CFC services'';
     We are revising the introduction to include language that 
applies this requirement to all service delivery models;
     We are revising paragraph (b)(2)(vi) to state ``the 
ability to freely choose from available home and community-based 
attendant providers, available service delivery models and if 
applicable, financial management entities.''
     We are adding a paragraph (c) to incorporate conflict of 
interest language proposed in Sec.  441.540(c)(4).

N. Service Budget Requirements (Sec.  441.560)

    We proposed to require that a service budget be developed and 
approved by the State and include specific items such as the specific 
dollar amount, how the individual is informed of the amount, and the 
procedures for how the individual may adjust the budget. We proposed 
that the budget methodology set forth by the State meet certain 
criteria, such as being objective and evidence based, be applied 
consistently to individuals in the program, and be included in the 
State plan. In addition, we proposed the budget methodology include 
calculations of the expected

[[Page 26876]]

costs of CFC services and supports if those services and supports were 
not self-directed. We proposed that States could place monetary or 
budgetary limits on self-directed CFC services and that if a State 
chose to do so, we proposed to require that the State have a process in 
place that describes the limits and the basis for the limits, any 
adjustments that will be allowed, and the basis for the adjustments, 
such as an individual's health and welfare. We proposed to require 
certain beneficiary safeguards in light of these possible limitations.
    Comment: Many commenters offered their support for this 
requirement.
    Response: We appreciate the commenters' support.
    Comment: One commenter requested clarification around CMS' intent 
for anticipated safeguards, and whether it is limited to circumstances 
in which an individual's needs change.
    Response: Our experience with self-direction indicated that at a 
minimum, a certain level of oversight by the State is necessary to help 
flag potential issues with the provision of services. We believe it is 
important that States have a system to oversee the expenditures being 
made by individuals self-directing their care. Premature depletion of 
the funds in a service budget could signal a health crisis which would 
require the State to immediately determine the health status of an 
individual and construct a new assessment. It could also signal misuse 
of funds, for which the State would need to take corrective action. 
Although there are general safeguard requirements outlined in the 
Support System section, the safeguard requirements in Sec.  441.560 
pertain specifically to resolving issues when the budgeted service 
amount is insufficient to meet the individual's needs.
    Comment: One commenter requested more guidance in the regulation on 
the procedures the State must have in place to provide safeguards when 
the budgeted service amount is insufficient to meet the individual's 
needs.
    Response: We appreciate the commenters' suggestions; however the 
specific safeguards are determined by the State. We will review the 
State's proposed safeguards during the review of their State plan 
amendment submitted to implement CFC.
    Comment: One commenter suggested that the rule should require the 
State to explain and provide in writing the criteria used for 
determining an individual's service budget amount when the individual 
receives the final written service plan.
    Response: Section 441.560(a)(2) requires the State to specify 
procedures for informing an individual of the amount of the service 
budget before the service plan is finalized. Additionally, paragraph 
(d) requires the State to have a method of notifying individuals of the 
amount of any limit that applies to CFC services and supports. To 
ensure individuals receive information in a manner in which they 
understand, we have revised Sec.  441.560(d) to include the following 
language: ``Notice must be communicated in an accessible format, 
communicated in plain language, and needed auxiliary aids and services 
should be provided.''
    Comment: One commenter wanted to know if a State must adhere to the 
required elements at Sec.  441.560(a)(1), (a)(2), (a)(3)(i) and (a)(5) 
if the State does not elect to provide transition costs, direct cash, 
vouchers or permissible purchases.
    Response: Any State allowing self-direction with a service budget 
must adhere to all requirements of the final regulation. To clarify the 
requirements as they relate to permissible services and supports, we 
are taking this opportunity to revise paragraph (a)(5) inserting 
``other permissible services and supports as defined at Sec.  
441.520(b)'' after ``transition costs'' and removing the remaining 
language.
    Comment: We received several comments requesting clarification with 
regard to a State's flexibility to establish service limits on the 
service budget. One commenter believes strongly that States should be 
allowed the flexibility to institute caps on hours of services in this 
section, especially in times of fiscal crisis or uncertainty. The 
commenter also believes States should not be required to provide all 
services relating to all needs identified through the needs assessment 
process as there are limited [financial] resources. Another commenter 
requested the regulation explicitly say if a State may set a per person 
service budget limit for the self-directed model.
    Response: CFC is an optional State plan service and States have the 
flexibility to determine the amount, duration, and scope of the 
program, within the confines of statutory requirements. We provide 
clarification under the assessment of functional need section that 
although the assessment will identify all needs an individual has, the 
CFC program will only be responsible for the provision of services 
available under CFC. We believe it is necessary and appropriate for the 
individual to be referred to other Medicaid and non-Medicaid programs 
the individual may be eligible for, that will address the needs 
identified that are not available under CFC.
    Comment: One commenter requested the provision of guidance to 
States on ensuring that when a budget is capped, there are methods to 
modify the budget allotment, especially in emergency situations.
    Response: Section 441.560(b)(5) and (c) require States to have 
procedures to adjust limitations placed on CFC services and procedures 
to provide safeguards to individuals when the budgeted amount is 
insufficient to meet the individual's needs. These provisions allow 
States to modify the budget allotments in emergency situations.
    Comment: One commenter recommends the regulation include 
appropriate safeguards to ensure that budgets are not arbitrarily 
reduced for an individual's self-directed services. Another commenter 
indicated it is not clear what ``safeguards'' are considered acceptable 
when the budgeted services amount is insufficient to meet the 
individual's needs. The service budget requirements should explicitly 
address what adjustments may be made, for example when the individual 
is at risk of an institutional placement because of budget limits. 
Another commenter indicated that individuals should be well-informed of 
the appeal process if they believe that a service budget cannot 
adequately meet their needs.
    Response: Section 441.560(c) requires the State to have procedures 
in place that will provide safeguards to individuals when the budgeted 
service amount is insufficient to meet the individual's needs. The 
Support System set forth in Sec.  441.555 requires individuals be 
informed of the process for changing the person-centered service plan. 
An individual is supposed to sign their plan only if they agree with 
it. If the individual does not agree with the service budget, it should 
be addressed at this time. Additionally, there are requirements for 
individuals to file an appeal, and as always, the standard Medicaid 
fair hearing appeal rights exist for individuals receiving CFC 
services.
    Comment: One commenter indicated that the regulation should require 
that appeals be handled by entities not responsible for conducting the 
assessment or providing case management services.
    Response: We agree appeals should be handled by an independent 
entity. Reconsiderations may be handled by the individuals responsible 
for conducting an assessment and facilitating the person-centered plan 
of care. However, if an individual is not satisfied with the service 
plan developed, including the amount of hours identified on the plan, 
an individual has the right to file an appeal. The individuals should 
file an

[[Page 26877]]

appeal following the State's appeal process.
    Comment: One commenter requested the rule clarify the applicability 
of ``evidence based'' to a service budget allocation methodology, as 
referenced in paragraph (b)(1). Additionally, the commenter requests 
clarification as to whether the ``cost data'' invokes a relationship to 
historical Medicaid rates and corresponding expenditure costs, or if it 
CMS' expectation that ``cost'' is related to audited costs for 
providing services unrelated to historical reimbursement rates.
    Response: By this, we mean that the method used by the State is 
based on an analysis of historical costs and utilization and other 
factors that are likely to affect costs.
    Comment: One commenter requested that CMS clarify the test against 
which we will measure service budget allocation methodology to 
determine approval. This commenter asked if there is an expectation of 
actuarial soundness or some other rate setting standard against which 
the methodology will be judged.
    Response: Verification of actuarial soundness will not be required. 
States are expected to provide a description of the methodology used to 
determine the individual's service budget amount. The methodology must 
take into account the cost of services if they were not self-directed. 
We would like to further clarify that we use the term ``cost'' to mean 
what it will cost the beneficiary to purchase the services, at either 
the fee-for-service rate or a beneficiary negotiated rate. We recognize 
the confusion the use of the terms ``allocation'' and ``cost'' in Sec.  
441.560(b)(1) have created, and therefore, we have revised the rule to 
remove the terms. Additionally, we have revised this section to remove 
redundant language.
    Comment: One commenter requested clarification as to whether a 
State may set participation parameters, such that individuals may be 
prohibited from participating if the individual's choices around wage 
limits result in the service budget being insufficient to cover the 
assessed needs.
    Response: Section 441.545(b)(2)(iii) requires that States make 
available a financial management entity to an individual who has 
demonstrated, after additional counseling information, training or 
assistance, that the individual cannot effectively manage the 
responsibilities of receiving a cash payment.
    Comment: A few commenters noted an incorrect regulatory citation 
for the Medicaid fair hearing process.
    Response: We have revised the rule to make this technical 
correction.
    Comment: A few commenters suggested the regulation be revised at 
paragraph (b)(1) to require individuals to follow a compensation 
standard developed by the State under Sec.  441.570. The commenters 
believe the States should include labor market data in their 
methodology for developing a participant service budget as a basis for 
setting adequate compensation standards for direct care services to 
support recruiting and retaining qualified providers.
    Response: We do not agree with the commenter's suggestion because 
it would not support the requirement at Sec.  441.550(e) granting 
individuals the authority to determine the amount paid for a service, 
support, or item.
    Comment: Several commenters expressed support for the requirement 
Sec.  441.560(e) that the service budget not restrict access to other 
medically necessary care and services furnished under the State plan.
    Response: We appreciate the commenter's support.
    Comment: One commenter requested that the service budget criterion 
be clear regarding what is permitted and prohibited. With regard to 
what is permitted, flexibility due to changing needs, priorities, or 
goals needs to be recognized.
    Response: States must ensure the method of determining the budget 
allocation is objective and evidence based utilizing valid and reliable 
cost data. Additionally, the regulation requires that States have a 
process for adjusting any limits placed on the provision of CFC 
services.
    Comment: One commenter indicated that safeguards for individuals to 
address budgeted amounts insufficient to meet consumer needs must be 
robust and timely.
    Response: We agree with the commenter and will review the 
description of the State's safeguards through the State plan amendment 
process.
    Comment: One commenter requests the regulation clarify if a State 
may set self-directed budgets at a level which assures that those using 
the self-directed service option will not exceed the amount of funding 
which would be spent under an agency-directed mode. The commenter 
indicated the necessity for fiscal neutrality, indicating that self-
directed services in the State has led to budgets being reduced by a 
specific percentage to account for the fact that flexibility is likely 
to mean a person uses more of the funding allowed to care for them 
during the year. The commenter urges that any reductions or discounts 
be based on data and a transparent methodology.
    Response: States determine the methodology through which the 
service budgets are developed. As required in paragraph (b)(1), this 
methodology must be objective and evidence-based, using valid, reliable 
cost data.
    Comment: One commenter recommends revising paragraph (a)(3)(i) to 
indicate that ``the procedure for an individual to freely adjust 
amounts allocated to specific services and supports within the approved 
service budget.''
    Response: We acknowledge the clarity this revision brings, and are 
revising the regulation to incorporate it.
    Comment: One commenter recommends health and safety be added to 
paragraph (c).
    Response: We do not believe that such a clarification is necessary, 
as the term ``safeguards'' is sufficiently broad to encompass health 
and safety protections.
    Upon consideration of public comments received, we are finalizing 
Sec.  441.560 with revision to paragraph (a)(5) inserting ``other 
permissible services and supports as defined at Sec.  441.520(b)'' 
after ``transition costs'' and removing the remaining language, 
correcting the citation of the fair hearings process in paragraph 
(a)(6), incorporating the commenter's suggested revision to paragraph 
(a)(3)(i), removing the terms ``allocation'' and ``cost'' from 
paragraph (b)(1), revising paragraph (d) to inserting ``Notice must be 
communicated in an accessible format, communicated in plain language, 
and needed auxiliary aids and services should be provided'' and 
removing redundant language.

O. Provider Qualifications (Sec.  441.565)

    We proposed to require that States provide assurances that 
necessary safeguards have been taken to protect the health and welfare 
of CFC recipients. States must define qualifications for providers of 
attendant services and supports under the agency-provider model. We 
proposed that an individual has the option to permit family members, or 
any other individuals to provide CFC services and supports identified 
in service plan as long as they meet the qualifications to provide such 
services and supports. We also proposed that individuals retain the 
right to train their attendant care providers in the specific areas of 
attendant services and supports needed by the individual, and that 
individuals also retain the right to establish

[[Page 26878]]

additional staff qualifications based on their needs and preferences.
    Comment: One commenter supported the requirement that States take 
necessary safeguards to protect the ``health and welfare'' of 
enrollees.
    Response: We recognize that the protection of health and safety 
requires program-wide consideration and oversight; we are therefore 
taking this opportunity to move this assurance from the Provider 
Qualifications section to the State Assurances section. Additionally, 
we are adding language to the State Assurance section to make it clear 
that this includes assuring the State's adherence to section 1903(i)(2) 
of the Act that Medicaid payment shall not be made for items or 
services furnished by individuals or entities excluded from 
participating in the Medicaid Program.
    Comment: One commenter expressed concern that the regulatory 
language at Sec.  441.565(c) does not state the statutory requirement 
that services be provided by an individual who is qualified. The 
commenter recommended the regulatory language be revised to explicitly 
state this.
    Response: The requirements at Sec.  441.565(b) requiring the 
development of provider qualifications includes the requirement that 
providers must be qualified. Therefore, we are not revising the 
regulatory language to explicitly state this.
    Comment: One commenter requested that we define the term 
``qualified.'' A few commenters requested that the regulation go beyond 
requiring States to define provider qualifications, by also 
establishing core qualifications for States to build around. The 
commenters believe the core qualifications should be applied uniformly 
to home care agencies, as well as the self-directed model with service 
budget. The commenters indicated that at a minimum, attendant care 
providers should be subject to criminal background checks, a minimum 
set of basic caregiver training standards, and training on mandated 
``abuse and neglect'' reporting. Several commenters requested that the 
regulation require States to adopt national credentialing standards for 
personal assistance attendant care providers. One commenter requested 
that we confirm that the individual's right to establish additional 
staff qualifications does not interfere with a State's ability to set 
provider qualifications including those necessary to ensure the 
individual's health and welfare. A few commenters expressed concern 
that the State would not define the qualifications of providers who are 
not part of an agency, such as family members and friends. These 
commenters believed that there should be minimum safeguards that States 
must meet in establishing provider qualifications for services provided 
under both an agency model and self-directed model. These standards 
should include caregiver training and competencies, health assessments, 
quality assurance systems and others.
    Response: Consistent with other Medicaid authorities providing 
personal assistant services, States have the flexibility to establish 
the minimum provider qualifications for providers of services provided 
under the agency-provider model. A description of provider 
qualifications will be reviewed with each State's proposal to implement 
CFC. Additionally, individuals receiving services under the agency-
provider model retain the right to establish additional staff 
qualifications based on the individual's needs and preferences. We 
agree that these additional qualifications should not interfere with 
the State's ability to protect the health and welfare of individuals 
receiving CFC services and supports.
    We appreciate the commenters' suggestions for possible safeguards 
States could employ to protect the health and welfare of participants 
receiving CFC services. While we agree with the suggestions, we believe 
that mandating specific safeguards will not allow States the 
flexibility to utilize procedures that have proven successful. In 
addition, we do not believe it is necessary or appropriate to establish 
at the Federal or State level provider qualifications for individuals 
delivering services via the self-directed model with service budget. A 
hallmark of self-directed models is the ability of the individual 
receiving services to define the qualifications of those furnishing 
services. The only exceptions in CFC is the need to adhere to 
requirements of State Practice Acts when determining the ability of 
``health-related tasks'' to be delegated by licensed healthcare 
professionals and adherence to section 1903(i) of the Act prohibiting 
payment for items or services furnished by individuals or entities 
excluded from participating in the Medicaid Program.
    We believe requiring State assurance of the provision of necessary 
safeguards is sufficient; however, as indicated above, we are moving 
this required assurance and adding language requiring adherence to 
section 1903(i) of the Act to Sec.  441.570, State Assurances.
    Comment: One commenter expressed concern that providers with a 
history of defrauding government programs need to be avoided in the 
selection process.
    Response: We agree with the commenters' concerns and expect States 
to implement safeguards to prevent such individuals or entities from 
providing CFC services.
    Comment: Several commenters requested the regulation require that 
all employers comply with basic attendant care providers rights such as 
minimum wage, tax withholding and provision of attendant care providers 
compensation.
    Response: Except for the mandatory flexibility within the self-
directed model with service budget for individuals to retain the 
authority to determine the amount to be paid for a service, we believe 
the commenters' suggestions are addressed in the requirements set forth 
in Sec. Sec.  441.545 and 441.570. Additionally, we have modified Sec.  
441.570 State Assurances to add a paragraph (d)(5) to say ``any other 
employment or tax related requirements.''
    Comment: One commenter asked if the personal care attendant is 
considered to be the provider. If the personal care attendants are 
considered to be providers, the commenter wanted to know if the 
providers are subject to the screening requirements under Sec.  
455.000.
    Response: Based on the commenter's statement we are unable to 
determine if the commenter is referencing the program integrity 
requirements found at 42 CFR Part 455 or if this is an error as the 
proposed rule for CFC did not contain a Sec.  455.000. However, we note 
that Sec.  400.203(1) defines provider as either of the following: (1) 
For the fee-for-service program, any individual or entity furnishing 
Medicaid services under an agreement with the Medicaid agency; or (2) 
For the managed care program, any individual or entity that is engaged 
in the delivery of health care services and is legally authorized to do 
so by the State in which it delivers the services. To the extent 
personal care attendants meet one of the above definitions, they would 
be considered Medicaid providers and subject the program integrity 
requirements found at 42 CFR part 455. We acknowledge that the inherent 
flexibility of who can provide services under a self-directed service 
model, may result in a personal care attendant not meeting the 
definition of providers found in Sec.  400.203. We believe the program 
safeguards included throughout this regulation, such as the activities 
required under the support system, provider qualifications, State 
assurances, and establishing a quality assurance system that evaluates 
quality of care and develops and implements mechanisms for discovery 
and

[[Page 26879]]

remediation and quality improvement activities, will ensure individuals 
receiving services under this benefit are afforded protections of 
health, safety and program integrity in circumstances in which the 
personal care attendant does not fall within the regulatory definition 
of a provider. Additionally, a State must adhere to the provisions of 
section 1902(a)(27) of the Act, and Federal regulations Sec.  431.107, 
governing provider agreements.
    Comment: We received many comments supporting the requirement that 
individuals have the option to permit family members or other 
individuals of their choosing to provide attendant services and 
supports. We also received many comments supporting the requirement 
that individuals set their own qualifications for family members or 
individuals they recruit.
    Response: We appreciate the commenter's support.
    Comment: One commenter believes services are best provided by 
public or not-for-profit entities. The commenter believes that if for-
profit driven entities are used, the contracts should specify the 
profit and make sure the rest is spent for the consumers' benefit. The 
commenter also expressed concern that services may be cut to boost 
profits.
    Response: The statute does not include language to exclude for-
profit entities from providing CFC services if they are qualified to do 
so. We believe the regulation provides sufficient safeguards to thwart 
inappropriate behavior that could occur with any provider.
    Comment: One commenter stated consumer voices need to be heard 
regarding the selection for providers.
    Response: We believe that self-direction and consumer choice are 
supported throughout the rule. Regardless of the service delivery 
model, the individuals have control over who is providing services to 
them. As specified in the statute, and implemented in provisions of the 
rule, individuals have control to select and manage services. The 
Development and Implementation Council, which requires its membership 
composition include a majority of elderly individuals, individuals with 
disabilities, and their representatives, is an excellent forum to 
discuss important issues such as service delivery options and provider 
types to be included in the State's CFC program.
    Comment: We received many comments requesting clarification 
regarding whether individuals are allowed to hire family members to 
provide CFC services. The commenters requested that participants be 
allowed maximum flexibility to hire any individual capable of providing 
services and supports, including legally responsible relatives. Many 
commenters requested that the regulatory language at Sec.  441.565(b) 
state that individuals have the option to have family members provide 
services and supports whether the State allows family members to be a 
attendant care provider or not.
    Response: Section 1915(k)(1)(A)(iv)(III) of the Act requires that 
services are provided by any individual who is qualified to provide 
such services, including family members. We interpret this to mean that 
under the self-directed model with service budget, States must allow 
individuals to hire family members qualified to provide any service 
identified on the person-centered service plan. Recognizing States have 
the option of only offering the agency-provider model, we expect that 
this model would allow an individual to exercise maximum control over 
who provides services to them. While we cannot mandate agencies to 
employ individuals' family members for the purpose of providing CFC 
services, we strongly encourage agencies to consider employing such 
individuals if they meet the established qualifications.
    Comment: Many commenters requested the regulatory language at Sec.  
441.565(c) be revised to state that individuals or their 
representatives have the right to train attendant care providers to 
perform any tasks within an approved service plan without regard to 
State licensure or certification requirements.
    Response: We interpret this provision to allow individuals to train 
providers to perform non-skilled activities tailored to the specific 
needs of the individual; therefore, we are not revising the regulatory 
language. However, for reimbursement to be made for services that meet 
the definition of a health-related task, those services must be 
delegated within the State's Practice Act for the practitioner 
delegating the service.
    Comment: One commenter asked for confirmation on the applicability 
of 42 CFR 440.167 that prohibits FFP for payments to legally 
responsible individuals for the provision of State plan personal care 
services, unless those services meet the criteria as being 
``extraordinary'' care.
    Response: The regulatory requirements for State Plan personal care 
services do not apply to CFC, which has its own statutory and 
regulatory requirements. We acknowledge the confusion created by 
including in the same section State flexibilities in determining 
provider qualifications under agency-provider models and individual 
flexibilities in determining provider qualifications under self-
directed models with service budgets. Such confusion was evident in 
many comments received. To that end, we are revising this section to 
indicate that paragraph (a) applies to all service delivery models, and 
paragraph (b) applies only to agency models and paragraph (c) applies 
only to self-directed models with a service budget. Paragraph (d) 
applies to ``other'' models defined by the State.
    Comment: Many commenters expressed concern that the provider 
qualifications established by the State could threaten the ability of 
individuals to staff their support needs. The commenters suggested 
there be an exception process if there is no satisfactory attendant 
care provider available and the consumer makes a voluntary affirmative 
choice to waive the provider qualifications requirement. The commenters 
suggested that the regulation define ``voluntary affirmative choice'' 
in a way that will allow informed and sophisticated consumers to have 
the default requirement for a provider qualifications waiver, while not 
allowing this authority to be abused. For example, an agency should not 
be able to offer an unsuspecting consumer a waiver to ``get a faster 
attendant placement.'' Lastly, the commenter recommended that the 
administrative burdens of ascertaining and evaluating provider 
qualifications should not fall so heavily on an individual as to 
prevent hiring.
    Response: As noted above, we have restructured this paragraph to 
clarify the requirements that apply under the various service delivery 
models. We believe this should alleviate any confusion. However, we 
disagree with the commenters' recommendation to add an exception 
process for individuals if there is no satisfactory attendant care 
provider available. For the purposes of ensuring health and welfare of 
individuals receiving CFC services, we believe that providers must meet 
either the qualification standards established by the State when 
services are delivered through the agency-provider model, or by the 
individual, when services are delivered through the self-directed model 
with service budget.
    Comment: One commenter requested clarification as to whether a 
State, in accordance with State law, may prohibit family members from 
serving as the client's representative while also providing paid 
attendant services.
    Response: We are clarifying here that an individual's 
representative may not

[[Page 26880]]

also serve as the individual's paid attendant. This arrangement was 
prohibited in the section 1915(j) program, and we are modifying the 
definition of ``individual's representative'' to continue that 
prohibition for CFC.
    Comment: One commenter requested that the regulation give States 
the authority to determine which family members may act as providers of 
care.
    Response: We do not believe it is appropriate for the regulation to 
authorize States to determine which family members may act as providers 
of care under the self-directed model with service budget. Consistent 
with the philosophy of self-direction, we believe individuals receiving 
CFC services must have the opportunity to exercise maximum control in 
deciding who can provide services.
    Comment: One commenter indicated that when services are provided in 
a traditional agency model, the regulation should mandate that States 
establish a qualification standard that includes establishing a 
specific set of patient rights, including the right to immediate access 
to a supervisor to request a change in attendant, or hours, or duties.
    Response: We do not agree that the regulation should mandate that 
States establish qualifications above and beyond what is already 
required for CFC. We believe that these important individual rights are 
included as requirements under the person-centered planning 
requirements at Sec.  441.540 and the support system requirements at 
Sec.  441.555.
    Comment: One commenter suggested that the regulation should set the 
expectation that fraud, waste and abuse will not be tolerated and 
should be prevented, punished and prosecuted.
    Response: A major tenet of the Medicaid program is maintaining 
program integrity. This requirement applies not only the section 
1915(k) authority, but to all Medicaid authorities. In addition, the 
CFC regulation specifically requires services furnished to be based on 
the assessment of functional need, and indicates that the person-
centered service plan should prevent the provision of unnecessary or 
inappropriate care. To promote the integrity of the Medicaid program, 
we have modified Sec.  441.570(a), State assurances, to explicitly 
require a State's adherence to section 1903(i) of the Act, which 
stipulates that Medicaid payment shall not be made for items or 
services furnished by individuals or entities excluded from 
participating in the Medicaid Program, when implementing the CFC State 
plan option.
    Comment: One commenter believes mandatory attendant training should 
be required. Another commenter believes the State should make available 
training programs or individualized coaching for those participants who 
prefer their attendant care provider receive such training. 
Alternatively, many commenters support the right of individuals to 
train attendant care providers in the specific areas of attendant care 
needed. The commenters suggested CMS clarify the interaction of this 
individual right with State laws mandating training requirements 
governing all attendant care providers.
    Response: We disagree with the commenters' suggestion to require 
States to have mandatory trainings for providers of attendant services, 
as this would remove the authority vested in the individuals to train 
their providers. However, to support the requirement at Sec.  441.565 
that individuals retain the right to train attendant care providers in 
specific areas, and to be consistent with related requirements under 
section 1915(j) of the Act, we expect States to allow individuals to 
have access to additional attendant care provider training if needed or 
desired by the individual and related to needs identified in the 
person-centered plan. We have revised the rule at Sec.  441.565 (a)(1) 
to reflect this change.
    Comment: One commenter requests that cultural competency provisions 
explicitly include lesbian, gay, bisexual, and transgender populations.
    Response: We do not believe that language specific to lesbian, gay, 
bisexual, and transgender populations is necessary, as the requirement 
applies for all individuals receiving CFC services.
    Comment: A few commenters believe that there should be certain 
safeguards and oversight to ensure that services have been provided 
appropriately and at the level that is authorized.
    Response: We believe that the regulation provides sufficient 
individual protections to detect whether needed services are provided 
appropriately. It is our expectation that an individual's services will 
be monitored by the entity providing support system services, and any 
irregularities in the provision of services will be detected and 
addressed. Additionally, the State Medicaid agency will exercise 
ongoing oversight and monitoring of the provision of services through 
review of the person-centered service plans, and through the Quality 
Assurance and Improvement Plan.
    Comment: One commenter requested clarification regarding whether a 
State may set limits on the number of hours an individual may receive 
from any single family member, such as 40 hours per week.
    Response: We do not believe it is appropriate for States to apply 
limitations to a certain classification of providers.
    Upon consideration of public comments received, we are finalizing 
Sec.  441.565 with revision, moving the requirement in paragraph (a) 
that requires States to assure the necessary safeguards that will be 
taken to protect the health and welfare of enrollees in CFC to Sec.  
441.570. ``State Assurances'' and modifying paragraph (c) to include 
the phrase ``including through the use of training programs offered by 
the State.'' We are also modifying this section to specify which 
requirements apply in various service delivery models.

P. State Assurances (Sec.  441.570)

    We proposed to reflect the requirements at section 1915(k)(3)(C) of 
the Act that, for the first full fiscal year in which the State plan 
amendment is implemented, the State must maintain or exceed the level 
of expenditures for services provided under sections 1905(a), 1915, or 
1115 of the Act, or otherwise, to individuals with disabilities or 
elderly individuals attributable to the preceding fiscal year. We also 
proposed to interpret this requirement to be limited to personal care 
attendant services. In addition we proposed to reflect requirements at 
section 1915(k)(4) of the Act that States electing this option must 
comply with certain laws in the provision of CFC regardless of which 
service delivery model the State elects to provide. Specifically, the 
statute requires that services and supports are provided in accordance 
with the Fair Labor Standards Act of 1938 and applicable Federal and 
State laws regarding withholding and payment of Federal and State 
income and payroll taxes; provision of unemployment and workers 
compensation insurance for attendant care workers; maintenance of 
general liability insurance; and occupational health and safety. We 
proposed to include these assurances as specified in the statute at 
Sec.  441.570(b).
    Comment: Multiple commenters supported limiting the application of 
the State maintenance of expenditure requirement to a defined set of 
services rather than to all Medicaid expenditures for older people and 
individuals with disabilities. Multiple commenters agreed that there is 
a need to develop a standard which more accurately reflects the 
legislative intent of CFC, as applying the maintenance of expenditure 
to all services is overly broad and would render the provision ``nearly 
pointless'',

[[Page 26881]]

but indicated that limiting it only to personal care services is overly 
narrow. Multiple commenters added that the maintenance of expenditure 
requirement should include all home and community-based services, not 
just personal care and indicated that this would be consistent with the 
intent of the law. Other commenters asked CMS to clarify in the 
regulation that CMS interpreted this requirement to only apply to 
personal care attendant services under sections 1905(a), 1915, and 1115 
of the Act for the first year.
    Response: We interpreted section 1915(k)(3)(C) of the Act to mean 
that, for the first full calendar year in which the State chooses to 
offer CFC in the State plan, the State's share of Medicaid personal 
care attendant expenditures for individuals with disabilities or 
elderly individuals must remain at the same level or be greater than 
State expenditures from the previous 12 month period year. As CFC is an 
attendant services and supports benefit, we believe it is appropriate 
to apply this maintenance of expenditure requirement only to comparable 
expenditures authorized under sections 1905(a), 1915, 1115 or other 
sections of the Act. We articulated this interpretation in the preamble 
of the proposed rule. To increase the clarity of this requirement, we 
are modifying the regulatory provision to specify the scope of services 
required under the requirement, to indicate that the clause ``or 
otherwise'' also applies to home and community-based attendant services 
authorized under other provisions of the Social Security Act, clarify 
that this requirement applied to State expenditures and to clarify we 
interpret the fiscal year to be a 12 month period. The new language 
will say ``For the first full 12 month period in which the State plan 
amendment is implemented, the State must maintain or exceed the level 
of State expenditures for home and community-based attendant services 
and supports provided under sections 1115, 1905(a), 1915, or otherwise, 
under the Act, to individuals with disabilities or elderly individuals 
attributable to the preceding 12 month period.''
    Comment: A commenter indicated a 1-year maintenance of expenditure 
requirement is not sufficient, given that demographics will drive an 
increasing need and suggested that the requirement should be at a 
baseline for the first full fiscal year and then increase based on 
factors such as population demographics or indicators of need or demand 
such as waiting lists, applications for services, etc. Another 
commenter recommended that the requirement include gradual increases 
each year in access to personal care services.
    Response: We believe that section 1915(k)(3)(C) of the Act was 
clear in terms of the timeframe for which States are required to 
maintain or exceed the level of expenditures.
    Comment: Multiple commenters indicated that while States should 
have the flexibility to move beneficiaries from other programs into 
CFC, they recommended that safeguards be in place to ensure that 
beneficiaries do not experience any disruptions or loss of benefits, 
and that they are able to retain their providers from the initial 
program if they previously directed their own supports. Multiple 
commenters added that the shift should be seamless for consumers. 
Another commenter added that if States substitute personal care 
services under CFC for otherwise available personal care services, the 
qualifications and availability of the services should be maintained so 
that no currently eligible person or group loses care, and pointed out 
that the level of expenditures could be maintained in several ways 
including the expansion of eligibility for personal care services under 
section 1915(c) programs or State plan personal care.
    Response: We believe the maintenance of expenditures provision will 
serve as a safeguard in that these expenditures cannot decrease for the 
first year of implementation; however, we acknowledge the commenters' 
concerns and expect States to ensure that services will not be 
disrupted, decreased, or lost as a result of a State choosing to elect 
CFC. We do not foresee there being an issue with individuals retaining 
their current providers if they choose to receive their attendant 
services and supports through CFC.
    Comment: Multiple commenters stated that it was their belief that 
the legislative intent of the maintenance of expenditure provision was 
to ensure that States implemented the CFC to expand access to services, 
and not as a way to constrict existing services while securing higher 
matching funds. The commenters suggested that there be extra scrutiny 
of State reductions in services that are related to taking up CFC, in 
particular, where the State makes no effort to grandfather in existing 
services for affected consumers. The commenters explained that if a 
State were to take up the CFC option and apply an institutional level 
of care eligibility requirement, the State might be tempted to 
eliminate its personal care option to get higher match for those 
services through CFC. The commenter added that the large majority of 
States do not have an institutional level of care requirement for the 
personal care option and thus many individuals who were in the personal 
care option would not be able to transition to CFC. While the commenter 
noted that the State would likely not be in technical violation of the 
maintenance of expenditure requirement, based on the broader CFC 
spending obligations, it might violate the spirit of the CFC for 
thousands of consumers to find themselves without personal care 
services. The commenter cautioned that HHS should be careful to avoid 
helping States evade the purpose of the requirement.
    Response: We do not believe that this regulation promotes the 
constriction of existing services to secure higher matching funds. We 
appreciate the suggestions regarding the potential reduction of 
services. The CFC State plan option provides individuals requiring an 
institutional level of care the opportunity to receive personal 
attendant services and supports (PAS) in the community instead of in an 
institution. We anticipate States will use this State plan option to 
improve access to non-institutional long term care services and 
supports. Additionally, Sec.  441.570 requires States, for the first 12 
months of implementing this State plan option, to maintain or exceed 
the level of State expenditures for similar services provided under 
other benefit authorities under the Act.
    Comment: One commenter advised that if the maintenance of 
expenditure requirements for CFC pertain only to personal care 
attendant services, it should be clarified in the regulatory language 
in paragraph (a) to include HCBS waiver services as well. The commenter 
also expressed concern regarding the interaction between the Affordable 
Care Act Maintenance of Effort (MOE) for home and community-based 
waiver services and the maintenance of expenditure requirement for CFC 
purposes, as the commenter anticipated that persons may move from a 
waiver to CFC, and indicated that States should not risk noncompliance 
with the MOE under the Affordable Care Act if persons move from HCBS to 
CFC. Another commenter indicated that States need clarification as to 
whether they are required to maintain the same number of waiver slots, 
as would be required by the Affordable Care Act MOE if a State takes up 
CFC, as States may be unwilling to take up the option if they cannot 
realize savings from directing people away from waivers and towards 
less expensive State plan services.
    Response: This set of comments addressed two aspects of the

[[Page 26882]]

maintenance of expenditure requirement of CFC. First, the spending 
covered by the maintenance of expenditure requirements are for home and 
community-based attendant care services in the State as authorized 
under sections 1905(a), 1915, 1115, or otherwise, under the Act. The 
final rule reflects that this requirement pertains to these services 
and these provisions of statute.
    Secondly, the comments raised questions regarding the relationship 
of the maintenance of expenditure requirements as set forth in section 
1915(k) of the Act to the MOE requirements established through 
Affordable Care Act as such requirements apply to long term services 
and supports, including HCBS waiver programs. The Affordable Care Act 
MOE pertains to Medicaid eligibility standards, methodologies, and 
procedures. Because institutional care and HCBS waivers can serve as a 
doorway to eligibility for certain individuals, changes impacting 
access to those benefits may raise MOE questions.
    While changes to the section 1915(c) waiver eligibility and 
capacity may have implications for the Affordable Care Act requirements 
regarding MOE, a State currently has great flexibility to modify 
benefits to manage waiver costs. As a result, a State may elect to 
provide attendant care services and supports through CFC that are 
currently provided through other Medicaid authorities. States seeking 
to reduce waiver capacity (``slots'') or otherwise adjust the 
eligibility requirements for HCBS waivers should consult with CMS to 
ensure continued compliance with the MOE requirements, and to receive 
guidance on alternatives available to them in this regard. For 
additional information on the MOE requirements of the Affordable Care 
Act and its relationship to HCBS waivers, please see the State Medicaid 
Director letter issued on this matter at http://www.cms.gov/SMDL/SMD/list.asp#TopOfPage.
    However, we do encourage States to evaluate what it offers under 
existing programs and consider the opportunities offered through CFC 
and the corresponding reporting and quality requirements to determine 
what is best for each State and its beneficiaries. We note that the 
additional 6 percentage point increase in FMAP would apply only to CFC, 
and would not apply to any currently approved program authorizing 
personal attendant services and supports.
    Comment: A commenter recommended that CMS require States to 
formulate a plan to reduce existing waiver waiting lists for personal 
attendant care services.
    Response: While we appreciate the commenter's suggestion, we do not 
plan to add a requirement to CFC for States to formulate such a plan as 
it is outside the scope of this benefit.
    Comment: Another commenter requested further clarification on the 
section 1915(k)(4) requirement that waiver services meet FLSA and 
payroll tax requirements. Currently the State in which this commenter 
resides does not pay payroll taxes. The State shifts its payroll 
obligations to Medicaid recipients and also imposes unpaid care on the 
providers forcing them to ``volunteer'' for their employers. The 
commenter would like clarification as to whether or not CMS is 
attempting to remedy these abuses for CFC Option, as well as existing 
waivers.
    Response: We reiterate that CFC is not a waiver program, but is a 
new, optional State plan benefit. Any State implementing CFC must 
adhere to the requirements in the authorizing legislation. By 
submitting a SPA to implement this program, the State will be assuring 
adherence to these requirements. States have the ability to contract 
with entities for the provision of activities such as the withholding 
of payroll taxes, etc., but retain ultimate responsibility for ensuring 
they are done appropriately.
    Comment: A commenter asked for details regarding the applicable 
Federal laws regarding the requirement to maintain ``general liability 
insurance'' as their State's current personal care services program 
does not require this insurance for any party, and their current 
program is in compliance with all other provisions of this section. The 
commenter requested that this language be removed. Another commenter 
asked that CMS clarify which entity is expected to maintain general 
liability insurance as it is unclear whether it is the individual self 
directing care, the attendant providing services, or the financial 
management entity. The commenter also asked CMS to clarify whether the 
attendant's employer must provide attendant care providers with health 
insurance coverage.
    Response: These details are best left to State Medicaid Agencies as 
they implement the program, so as to allow for State flexibility.
    Comment: Another commenter suggested that CMS require States to set 
forth in detail how they intend to comply with/meet the various 
employment-related laws.
    Response: States electing CFC must submit a State plan amendment 
that assures their adherence to this requirement. The specifics of how 
this happens are left to the States to determine.
    Comment: A commenter stated that at paragraph (c)(4), CMS indicates 
that a State must assure that all applicable provisions of Federal and 
State law are met including those related to ``occupational health and 
safety'' and added that since the majority of CFC services will be 
delivered under person-centered plans and primarily in persons' 
residences, CMS should clarify how they envision States ensuring 
compliance with OSHA requirements, if that is the intent. The commenter 
stated that if compliance with OSHA requirements is not the intent, CMS 
needs to clarify what is meant by ``occupational health and safety.''
    Response: These assurances were set forth in statute at section 
1915(k)(4) of the Act. We will look to the State Medicaid Agencies to 
implement any policies they believe are necessary to ensure compliance.
    Comment: Two commenters proposed an additional assurance at a new 
paragraph (c)(5) that States ensure that fiscal agents who will be 
cutting checks to attendant care providers on behalf of beneficiaries 
have sufficient cash reserves to be able to pay attendant care 
providers timely, notwithstanding delays in reimbursement due to bank 
holidays, etc.
    Response: It is the responsibility of a State to ensure that the 
fiscal agents with whom the State chooses to work are capable of 
compensating providers of services and supports.
    Comment: Several commenters recommended the following language: ``A 
State must assure that fair hearing processes for individuals are met 
in accordance with 42 CFR Part 431 Subpart E.''
    Response: State Medicaid programs must adhere to the fair hearing 
requirements at 42 CFR part 431 Subpart E for all Medicaid programs. 
Therefore, we do not agree with the commenters that it is necessary to 
add an additional State assurance to the regulations for CFC.
    Comment: A commenter suggested that the regulation promote the use 
of local, peer-based and consumer-controlled providers so beneficiaries 
have maximum access to their fiscal agent.
    Response: This regulation includes extensive flexibility for States 
to establish provider qualifications in a way that encompasses a broad 
pool of experience. Individuals participating in a self-directed model 
will have ultimate

[[Page 26883]]

flexibility for selecting providers of services.
    Upon consideration of public comments received, we are finalizing 
Sec.  441.570 with revision, to clarify the intent of the maintenance 
of expenditures requirements proposed in paragraph (a), now paragraph 
(b). In addition, as indicated above, we are adding a new paragraph to 
reflect the movement of the requirement that States assure the 
provision of necessary safeguards to protect the health and welfare of 
CFC enrollees including adherence to section 1903(i) of the Act which 
stipulates that Medicaid payment shall not be made for items or 
services furnished by individuals or entities excluded from 
participating in the Medicaid Program. This will be a new paragraph 
(a), with the existing language being adjusted accordingly. As 
indicated in Sec.  441.565, Provider Qualifications, we are adding a 
new paragraph (d)(5) to state ``any other employment or tax related 
requirements.''

Q. Development and Implementation Council (Sec.  441.575)

    We proposed that States must establish a Development and 
Implementation Council that is primarily comprised of individuals with 
disabilities, elderly individuals and their representatives. We also 
proposed to require that States must consult and collaborate with this 
Council during the development and implementation of a State plan 
amendment to provide home and community-based attendant services and 
supports under CFC.
    Comment: Many commenters had positive comments regarding the 
Development and Implementation Council. Many commenters stated the 
Development and Implementation Council is an excellent idea and a 
positive step forward for States, as well as a mechanism to ensure 
consumer input and implementation monitoring. Many of the commenters 
were pleased that CMS is soliciting comments on ways to design the 
Implementation Council, as it provides for robust stakeholder 
collaboration.
    Response: We agree that the Council will provide additional 
opportunities for stakeholder input and collaboration.
    Comment: Many commenters weighed in on the makeup of the 
Development and Implementation Council. Many commenters requested that 
a diverse population from advocacy organizations, disability rights 
groups, private agency representatives, stakeholders, direct support 
professionals, and direct service attendant care providers or their 
representatives be included in the Council's membership.
    Many commenters requested that the final rule ensure that a 
majority of the Council is made up of individuals with disabilities, 
elderly individuals, and their representatives. The commenters further 
recommended that the Council should be comprised of members that 
reflect the diverse populations who use or could use CFC services and 
supports. One commenter requested that the following sentence be added 
to the end of Sec.  441.575(a): ``This Council must also include home 
and community-based attendants or their selected representatives.'' 
Another commenter requested that the rule should require that 51 
percent of the Council be made up of elderly or disabled individuals.
    Response: Section 1915(k)(3)(A) of the Act requires that this 
Council include a majority of members with disabilities, elderly 
individuals and their representatives. This was reflected in the 
proposed rule at Sec.  441.575 and is a requirement of the program. We 
believe that this membership will reflect the populations who will 
participate in CFC. We acknowledge that various advocacy organizations, 
disability rights groups, private agency representatives, stakeholders, 
direct support professionals and direct service attendant care 
providers and representatives could have a voice on the Council as long 
as the Council meets the requirements set forth in the final 
regulation. We do not agree that the regulation should add an 
additional requirement that attendants or their selected 
representatives be included in the membership of the Council or that 
the Council be broken down into a specific percentage of individuals. 
The statute specifically requires a ``majority'' of members with 
disabilities, elderly individuals and their representatives and this 
language will be maintained in our final rule. However, we acknowledge 
that the regulatory language proposed in the proposed rule used the 
phrase ``primarily comprised'' rather than a ``majority.'' We are 
revising the regulation to more closely align with the statute.
    Comment: One commenter requested that consumers with the highest 
needs have a significant presence on the Development and Implementation 
Council.
    Response: We believe that a having an array of individuals with 
varying needs on the Council will provide a broad representation of the 
individuals for whom CFC was created.
    Comment: One commenter requested further definition of an ``aging 
or disability'' consumer. The commenter requested clarification on 
whether an older adult, who is not Medicaid eligible or low income, 
could hold a position on the Council under the current definition.
    Response: Section 1915(k)(3)(A) of the Act requires that the 
Development and Implementation Council include a majority of members 
with disabilities, elderly individuals and their representatives. The 
statute did not set forth any additional qualifier or specifications 
these individuals must meet to participate on the Council. Therefore, 
we do not believe an older adult who is not on Medicaid or is not low-
income would be prohibited from participating on the Council.
    Comment: One commenter requested that the regulation suggest 
agencies and advocacy groups from which the Council could recruit.
    Response: We disagree with providing specific agencies and advocacy 
groups from which to recruit, as this would unfairly advantage certain 
groups. States have the flexibility to determine how to best meet this 
requirement.
    Comment: Many commenters requested that the Council's meetings and 
other functions be accessible and that supports be provided to 
individuals, as needed, to facilitate their full participation. The 
commenters indicated that these supports could include the use of 
modern technological devices. Several commenters requested that the 
Development and Implementation Council should hold their meetings 
publically and provide opportunities for public input, which would 
allow for transparency.
    Response: We agree that the Council's meetings and other functions 
should be accessible to individuals to facilitate their full 
participation. With regard to the commenters' suggestion to require 
that these meetings be held publicly to allow for transparency, while 
we appreciate the suggestion, States have the flexibility to decide how 
to meet these requirements. A State's proposal for operating the 
Council will need to be described in their State plan amendment and 
approved by CMS for implementation. We do encourage these meetings to 
be held in a way that facilitates participation by a broad range of 
individuals.
    Comment: Several commenters requested clarification of what 
``transparency in the selection process'' means, as mentioned in the 
preamble to this section, and suggested using rules for implementing 
section 10201(i) of the Affordable Care Act as a means of providing 
transparency.
    Response: In the proposed rule, we invited comments regarding how 
States

[[Page 26884]]

could achieve robust stakeholder input including transparency in the 
selection process and activities of the Council. The intent of this 
request was to gather ideas regarding what processes States might use 
to select members of the Council. States have the flexibility to 
determine how to meet the requirements of the final rule and we 
encourage States to be transparent in their selection processes.
    Comment: One commenter requested that States be required to provide 
public notice on how they will establish the Development and 
Implementation Council.
    Response: While we encourage States to provide public notice 
regarding how they will establish the Council, as this is a matter of 
interest to individuals and may be a direct way to solicit members, we 
do not agree that this should be an additional requirement that is 
added to this regulation. States maintain the flexibility to determine 
how to best meet the requirements to implement CFC.
    Comment: Many commenters provided input related to how the 
Development and Implementation Council should be structured and the 
duties associated with it. Many commenters requested that baseline 
definitions and minimum participation standards for the Council be 
included in the final rule.
    Response: We disagree with further defining the role of the Council 
or with setting minimum participation standards for the Council in this 
regulation.
    Comment: One commenter provided models and examples of committees 
and councils formed to address issues related to home health care.
    Response: We appreciate the commenter's efforts and contribution, 
but again emphasize that, outside of the specific mandates of the 
regulation, States will have the discretion to design their councils.
    Comment: One commenter requested that the regulation require the 
Council to be in place, and to provide recommendations on CFC prior to 
October 2011, or whenever the State implements the program.
    Response: We agree with the commenter that the Council will need to 
be in place prior to implementation, as the State is required to 
consult and collaborate with the Council to develop a State plan 
amendment for CFC, as set forth in section 1915(k)(3)(A) of the Act and 
reflected at Sec.  441.575. We do not agree that revisions to the 
regulation are necessary.
    Comment: One commenter requested that Council members be trained on 
what it means to be a Council member, including what the expectations 
are with regard to their role representing a larger constituency group. 
Council members should be supported in the acquisition of knowledge 
necessary to be active members and provided support to ensure meeting 
attendance.
    Response: We agree that members of the Council should understand 
their role in the Council and the responsibilities that the Council has 
with regard to CFC. States may want to take this into consideration 
when determining how to best meet the requirements of this Council. It 
is important for the Council membership to understand their role and 
the purpose of the Council as a whole. Training requirements for the 
Council are beyond the scope of this regulation and we do not agree 
with the commenter that these should be added to the regulation. With 
regard to the commenter's point about support for meeting attendance, 
as we indicated above, States should make every effort to ensure that 
the meetings are held at times and locations that are accessible to the 
members of the Council.
    Comment: One commenter requested that financial and personnel 
resources be dedicated solely to the work of the Council. The commenter 
added that States should recognize that the frequency of meetings will 
impact the success of the Council and suggested that they occur at 
least quarterly.
    Response: States have the flexibility to implement the Council, and 
to determine the frequency at which meetings of the Council will occur, 
as long as all the requirements in the final regulation are met. 
Therefore, we do not agree that the regulation should add specific 
requirements pertaining to these issues.
    Comment: Many commenters weighed in on the level of influence that 
the Development and Implementation Council has on the State. One 
commenter requested that the recommendations made by the Development 
and Implementation Council be incorporated into the State plan. One 
commenter expressed concern regarding the role of Council as it relates 
to the independent decision making authority of the State in developing 
and implementing a State plan amendment for CFC. The commenter would 
like clarification that the Council should in no way be empowered to 
impede a State's authority.
    Response: As noted above, section 1915(k)(3)(A) of the Act sets 
forth the requirement that a State establish the Development and 
Implementation Council. This provision also requires a State to consult 
and collaborate with this Council to develop and implement the State 
plan amendment for CFC. While States must describe in their State plan 
amendment how this collaboration and consultation occurred, this does 
not mean that the State's ability to make decisions is compromised. 
States need to consider the Council's input and should make every 
effort to incorporate the feedback of the Council in these decisions. 
However, we are not interpreting ``collaboration'' as total 
concurrence.
    Comment: Another commenter requested that the life of the 
Development and Implementation Council be extended beyond 
implementation to include a role in the ongoing improvement of the 
State's CFC program.
    Response: Section 1915(k)(3) of the Act requires consultation and 
collaboration with the Council ``in order for a State plan amendment to 
be approved under this paragraph.'' We encourage States to continue 
operations of the Council even after implementation of CFC. A strict 
interpretation of the statute would require consultation and 
collaboration with the Council prior to submitting any type of CFC SPA 
to CMS, which would encompass amendments to an already approved CFC 
SPA. We recognize that requiring such consultation and collaboration 
prior to submitting a SPA to implement a minor or administrative change 
would be overly burdensome to both the State and Council members. But 
we are taking this opportunity to specify that any substantive changes 
to the operation of an approved CFC program would require the prior 
consultation and collaboration of the Council. We would define a 
substantive change to include revisions to the amount, duration, and 
scope of services provided under CFC, revisions to the service delivery 
model, revisions to payment methodologies, etc.
    Comment: Another commenter requested that the Development and 
Implementation Council identify specific data to help better advise the 
State on the program and recommended that the proposed rules should 
also assure that States are responsive to the Council's request for 
such data.
    Response: Section 441.575 reflects the requirements in the statute 
for this Council and we do not agree that additional requirements are 
necessary in regulation.
    Comment: Many commenters requested further guidance from CMS 
regarding the Development and Implementation Council. A number of 
commenters requested confirmation that

[[Page 26885]]

a State may use an existing self directed care advisory committee or 
whether the requirement is for a dedicated advisory Council limited to 
self direction pursued under the section 1915(k) authority. Many 
commenters believe States should ensure that the Council coordinates 
with other stakeholder bodies that have related missions such as 
Olmstead implementation councils and long-term service and support 
commissions.
    Response: States may utilize existing advisory bodies in the 
implementation of CFC, as long as the statutory requirements for the 
Development and Implementation Council are met. We acknowledge the 
benefits of the Council coordinating with related stakeholder councils 
and commissions and strongly encourage States to do so. States may also 
choose to leverage these councils and/or incorporate members from these 
councils to meet the requirements for CFC.
    Comment: Many commenters requested amending the current proposed 
language to include more specific Development and Implementation 
Council criteria regarding what groups should be included in the 
Council membership and additional roles that the Council should assume. 
Several commenters requested adding a reference to ``direct-care 
attendant care providers'' after ``elderly individuals.'' The rationale 
behind the commenters' request is that direct care attendant care 
providers' contributions will enhance the work of the Council by 
providing regular, direct communication with the State on core service 
delivery issues. Furthermore the commenters recommend the following 
language be included, ``(c) The Council should develop a plan that 
ensures the adequacy of provider rates and compensation; makes 
attendant care provider training available; establishes a central 
mechanism to help program participants find providers; and develops an 
approach to collecting essential workforce data elements.''
    Response: As indicated above, the statute was very specific in both 
the requirements for the membership and the functions and 
responsibilities of the Council. The final regulations reflect the 
statutory requirement and we do not agree with creating additional 
requirements that States must meet in addition to what is clear in the 
statute.
    Comment: One commenter requested clarification regarding whether 
the activities of the Development and Implementation Council will be 
eligible for Federal funds because the Council is mandated both by 
statute and regulation.
    Response: Activities required by CFC that are done for the 
operation of the program, such as implementation of the Development and 
Implementation Council will not receive an additional 6 percentage 
point FMAP increase, as they are administrative activities and are only 
eligible for the standard Federal administrative matching rate of 50 
percent available at Sec.  433.15(b)(7).
    Comment: Several commenters requested a timeline for the creation 
of this Council.
    Response: We believe that the Council should be in place prior to 
the submittal of a SPA requesting CFC, as States are required to 
consult and collaborate with the Council regarding the development and 
implementation of a SPA for CFC.
    Comment: One commenter requested changing the rule to state: ``(a) 
States must establish a Development and Implementation Council 
comprised primarily of individuals with disabilities, elderly 
individuals, their representatives, and disability rights advocates. 
The Development and Implementation Council must be cross-disability and 
cross-age and must include representation of all categories identified 
in this paragraph; (b) The Council must include individuals who are 
eligible for and, when applicable, in receipt of CFC services; (c) 
States must consult and collaborate with the Council when developing 
and implementing a State plan amendment to provide home and community-
based attendant services and supports or when contemplating any 
changes; and (d) To maintain quality assurance, States must continue to 
regularly consult with the Council and incorporate their 
recommendations into the operation of the Community First Choice 
Option.''
    Response: We appreciate these suggestions, but do not agree that 
these additional requirements need to be incorporated into the 
regulation.
    Comment: Another commenter requested changing the Development and 
Implementation Council language as follows: ``(a) States must establish 
a Development and Implementation Council which includes providers and 
individuals with disabilities including elderly individuals, and their 
representatives; and (b) States must consult the Council when 
developing and implementing a State plan amendment to provide home and 
community-based attendant services and supports.''
    Response: We disagree with adding ``providers'' to Sec.  
441.575(a). The statute only directs that the majority of the Council 
must consist of elderly or disabled individuals, and their 
representatives. We do not believe it is appropriate to require other 
representation. We believe that Sec.  441.575(b) closely mirrors the 
commenter's change in language and does not require change.
    Comment: One commenter requested clarification of the term 
``representative'' in reference to individuals who are elderly, have 
disabilities, or are the representatives of individuals with 
disabilities. Another commenter requested clarification of the term 
``consumer representative'' as it is ambiguous and could be interpreted 
as an individual representing a consumer or an employee of an advocacy 
organization.
    Response: We are interpreting ``representative'' broadly in the 
context of the Council, including both the individual's representative, 
as defined in Sec.  441.505, and other representatives of elderly 
individuals or individuals with disabilities in general. The phrase 
``consumer representative'' is not used in this regulation.
    Comment: One commenter recommended that the proposed rule expressly 
state that section 1915(k)(3) of the Act, pertaining to State 
collaboration with a Development and Implementation Council, does not 
negate the State responsibility to solicit advice from Indian health 
programs and urban Indian organizations as required by section 5006(e) 
of the ARRA.
    Response: We acknowledge the commenter's concern. Nothing in the 
CFC regulation should be construed as superseding current requirements 
for States in regard to Indian health organizations and programs.
    Upon consideration of public comments received, we are finalizing 
Sec.  441.575 with revision, to align with the statutory requirement 
that a majority of the Council be comprised of individuals with 
disabilities, elderly individuals, and their representatives.

R. Data Collection (Sec.  441.580)

    We proposed to require that States must provide information 
regarding the provision of home and community-based attendant services 
and supports under CFC for each fiscal year for which the services and 
supports are provided. We also proposed a number of specific data 
elements that must be collected and reported.
    Comment: One commenter commended the inclusion of subpart (c) 
regarding the collecting of information about individuals served under 
CFC and indicated that this data will be an essential tool to identify 
deficiencies in the provision of the benefit.
    Response: We appreciate the commenter's support.

[[Page 26886]]

    Comment: A few commenters asked what is meant by ``type of 
disability'', as indicated in paragraph (c).
    Response: We interpret ``type of disability'' as set forth in 
section 1915(k)(5)(B)(iii) to include developmental disability, 
physical disability, traumatic brain injury, etc.
    Comment: One commenter stated that in section Sec.  441.535(a)(5) 
States are required to obtain information about an individual's 
``school.'' This commenter asked if ``school'' is synonymous with 
``education level'' as specified in Sec.  441.580(c).
    Response: Based on comments, we revised the text at Sec.  
441.535(a) and school is no longer a specified element of the 
assessment of functional need for the implementation of CFC. Therefore, 
there is no need to clarify further as the data collection requirement 
at Sec.  441.580(c) is clear regarding ``education level.''
    Comment: One commenter asked for a clarification of ``previous 
fiscal year'' with regard to data collection timeframes.
    Response: We interpret ``fiscal year'' to mean ``Federal fiscal 
year.'' We plan to issue additional guidance to States regarding 
maintenance of expenditure requirements.
    Comment: Several commenters asked for clarification regarding the 
data collection requirements at Sec.  441.580(e) in terms of what CMS 
meant by ``data regarding how the State provides CFC and other home and 
community-based services.''
    Response: We interpret this requirement to mean the methods in 
which the State delivers home and community-based services under CFC, 
through other State Plan authorities, through section 1915(c) waivers, 
or through section 1115 demonstrations. For CFC, this could include 
which service models are offered in the State, the permissible services 
and supports that a State has chosen to make available, any limits the 
State has set on services and supports, and a number of other factors 
as determined by the State. We anticipate being able to collect much of 
the information related to this requirement from the State Plan as the 
State Plan must describe how the State is providing CFC. We anticipate 
releasing additional guidance in the future, providing more detail on 
data collection and how it relates to the CFC evaluation required in 
the legislation.
    Comment: One commenter stated that the language in paragraph (g) 
appears to be a request for a description and not data collection 
activity.
    Response: We do not understand the commenter's concerns based on 
this comment, but while the requirement at Sec.  441.580(g) could 
include a description of how the State provides individuals the choice 
to receive home and community-based services in lieu of institutional 
care, it could also include information regarding the methods used to 
offer this choice, the strategies involved in making this choice 
available, and the number of individuals that have made that choice.
    Comment: One commenter asked CMS to clarify any expectations to 
reconcile estimated number of individuals anticipated to receive 
services against actual utilization. This commenter asked if there will 
be an expected accuracy standard and further stated that since this is 
a new option there is potential for significant discrepancy.
    Response: We are clarifying that States may report on the actual 
number of individuals that received CFC services and supports in the 
prior fiscal year, when reporting on the estimate of individuals 
expected to receive them in the upcoming fiscal year. We understand 
that there will be discrepancies in the number of individuals estimated 
vs. actually served.
    Comment: One commenter sought clarification on the respective roles 
the State and Federal government will play in regard to the evaluation.
    Response: Section 1915(k)(5) of the Act sets forth the requirements 
that States provide data to the Secretary for an evaluation and reports 
to Congress. The States and the Federal government will partner to 
accomplish an evaluation of CFC. The States can evaluate their 
individual programs based on data collected throughout the fiscal year. 
The Federal government will be evaluating CFC on a nationwide basis 
based on each State's data. We anticipate releasing additional guidance 
in the future, providing more detail on data collection and how it 
relates to the CFC evaluation required in the legislation.
    Comment: One commenter asked whether a self-report is an acceptable 
standard for type of disability, education level and employment status. 
Additionally, this commenter asked that CMS clarify the acceptability 
of retaining the original data with updates if there are changes rather 
than collecting it each year. This commenter also asked for 
clarification of the expectations for linking the data collected and 
asked whether a State could begin with data unlinked and phase in those 
capabilities over time.
    Response: We are deferring answering this question until such time 
as we release additional guidance in the future, providing more detail 
on data collection and how it relates to the CFC evaluation required in 
the legislation.
    Comment: One commenter asked what the Department hopes to collect.
    Response: Through the data collection process, the Department hopes 
to determine the effectiveness of the provision of CFC services and 
supports in allowing the individuals receiving such services and 
supports to lead an independent life to the maximum extent possible; 
the impact on the physical and emotional health of the individuals who 
receive such services; and an comparative analysis of the costs of 
services provided under the State plan amendment under this paragraph 
and those provided under institutional care in a nursing facility, 
institution for mental diseases, or an intermediate care facility for 
the mentally retarded. As such, we are modifying the regulation to 
include a data collection requirement for States to capture data on the 
impact of CFC services and supports on the physical and emotional 
health of individuals, and other data as determined by the Secretary.
    Comment: One commenter requested specificity of the exact data 
comparison expected for CFC and other home and community-based 
services.
    Response: We are deferring answering this question until such time 
as we release additional guidance in the future, providing more detail 
on data collection and how it relates to the CFC evaluation required in 
the legislation.
    Comment: One commenter suggested that the data collection section 
should begin with what questions CMS wants answered, some of which are 
in the preamble. This commenter further asked what the data at Sec.  
441.580 are supposed to illuminate. In conclusion, this commenter 
suggested considering convening an expert group to help draw up data 
points.
    Response: The data collected from States will be used to complete 
the statutorily required evaluation of the effectiveness of CFC 
services and supports. We anticipate releasing additional guidance in 
the future, providing more detail on data collection and how it relates 
to the CFC evaluation required in the legislation.
    Comment: One commenter asked for clarification regarding reporting 
the number of individuals that received services and supports during 
the preceding fiscal year. This commenter asked if after CFC has been 
in place the second and following years, if States report the number of 
persons in CFC from the preceding year(s).
    Response: In accordance with section 1915(k)(5)(B) of the Act, 
States should

[[Page 26887]]

report the number of individuals that have received CFC services and 
supports during the preceding fiscal year. This means that after CFC 
has been in place the second and following years, States should report 
the number of persons in CFC for the preceding year (that is, reporting 
the number of individuals served under CFC in year one after the 
program has been in place for 2 years).
    Comment: Two commenters asked for clarification pertaining to the 
requirement to report the specific number of individuals who were 
previously served under other authorities or State Plan options.
    Response: To clarify, with regard to individuals receiving CFC 
services and supports, the State should report the number of these 
individuals who were previously receiving supports under sections 1115, 
1915(c) and (i) of the Act, or the personal care State plan option.
    Comment: One commenter asked whether a State may limit the number 
of individuals reported to those who received attendant support 
services under the specified authorities rather than all individuals 
served under the waivers, with regard to the requirement in paragraph 
(d).
    Response: A State may not limit the number of individuals reported 
in this way. As stated in Sec.  441.580(d), States are required to 
report the specific number of CFC individuals who were previously 
served under another authority regardless of what services and supports 
were received under that authority.
    Comment: One commenter asked whether the requirement to report the 
specific number of individuals who have been previously served under 
sections 1115, 1915(c) and (i) of the Act is intended to include those 
individuals who are served concurrently or just those who are no longer 
accessing personal care services under those authorities and are now 
accessing only CFC services.
    Response: States are required to report the number of individuals 
who were previously served under the authorities stated above, meaning 
that these individuals are now accessing attendant care services and 
supports through the CFC Option. It is possible that individuals 
receiving attendant services and supports through CFC could also be 
receiving other services, particularly via a section 1115 demonstration 
or section 1915(c) waiver.
    Comment: One commenter stated that it is imperative that data 
collection is not a barrier to the provision of timely, high quality 
services.
    Response: We agree that data collection should not be a barrier to 
the provision of services. Our intention is to place as little burden 
as possible on States and individuals in terms of data collection while 
ensuring that data is available to comply with the statutory 
requirements for evaluation and reporting.
    Comment: Many commenters provided suggestions for additional data 
collection options. One commenter recommended the regulation require 
recording the number of individuals served, both in terms of the number 
of individuals eligible to receive CFC, and in terms of individuals 
receiving all of the various CFC services. Another commenter stated 
that it would be helpful if the data could show whether individuals who 
transferred to CFC from another home and community-based option 
experienced any loss of service subsequent to the transfer. This same 
commenter recommended that the regulation provide for the collection of 
data in such a way as to tell whether individuals receiving CFC 
services and supports were previously receiving home and community-
based services through waivers or other options, or if individuals 
receiving CFC services are newly eligible for home and community-based 
services. Two commenters suggested collecting data specific to the 
service models utilized. One of these commenters further suggested 
including what services and items are used by those choosing the agency 
model versus those who choose the self-directed model with a service 
budget. Several commenters suggested including data pertaining to the 
number of people who were previously receiving services in institutions 
or nursing facilities. One of these commenters suggested collecting 
data on Medicaid costs of this option vs. Medicaid costs in 
institutional settings. Two commenters suggested that data should be 
made available to the public. One of these commenters also suggested 
that CMS should collect the data quarterly. Several commenters also 
suggested including data with additional demographic break-down of 
individuals. Two commenters suggested collecting data pertaining to 
race. One of these commenters suggested also including ethnicity, 
limited English proficiency, and type of residence. One commenter 
suggested that States include optional sexual orientation and gender 
identity questions to break down utilization rates. One commenter 
suggested requiring States to provide data on an individual's veteran 
status. Many commenters recommended that States be urged to provide 
data on the staff providing services including: attendant care provider 
availability, turnover and retention rates, and compensation. One 
commenter suggested also collecting data pertaining to training and 
credentialing of staff. Additionally, many commenters stated that in a 
self-directed delivery system, program participants will be the most 
likely source of data pertaining to staff, and urged for identification 
of collection methods that will be feasible for participants. One 
commenter suggested adding an ``other as determined by the Secretary'' 
element to this section.
    Response: We appreciate the ideas and suggestions that commenters 
proposed. States continue to have the flexibility to design their data 
collection requirements as long as all of the requirements included in 
the regulation for CFC are met. States may adopt additional data 
collection requirements for their own purposes. As indicated above, we 
are adding data collection requirements for States to capture data on 
the impact of CFC services and supports on the physical and emotional 
health of individuals, and other data as determined by the Secretary.
    Comment: One commenter stated that data collection requirements are 
excessive in comparison to reporting on section 1915(c) waivers and the 
section 1915(j) State Plan option. The commenter also stated that some 
of the requirements do not appear to provide CMS or the States with any 
additional information that is useful in the operation of multiple home 
and community-based services programs, quality assurance, or customer 
satisfaction. This commenter also stated that the requirements at 
paragraphs (a), (b), (d), and (f) are similar to existing reporting.
    Response: We have implemented data collection requirements as they 
were specified in the statute. We do not agree that the data collection 
requirements are excessive. We believe that these requirements are an 
essential tool needed to evaluate CFC.
    Comment: One commenter asked for CMS to clarify anticipated 
mechanisms to report annual estimates, and asked whether CMS will make 
changes to existing reporting mechanisms. Another commenter suggested 
that CMS provide States with flexibility in data reporting until 
existing State automated systems can be updated to accommodate new 
reporting requirements. Another commenter stated that mechanisms chosen 
need to include consumer input and consumer satisfaction surveys as 
well as outcome measures.

[[Page 26888]]

    Response: As we noted, we will provide future guidance on the 
format of this reporting requirement. We will consider the commenters' 
perspectives as we develop our guidance and will try to impose as 
little burden on the States and individuals as possible. However, with 
regard to State flexibility in reporting, States must provide the 
information specified in Sec.  441.580 in a timely manner regardless of 
the State's systems and potential system modifications needed. States 
may leverage existing data collection and reporting vehicles to meet 
the requirements of CFC.
    Upon consideration of the public comments received, we are 
finalizing Sec.  441.580 with revision, adding data collection 
requirements for States to capture data on the impact of CFC services 
and supports on the physical and emotional health of individuals, and 
other data as determined by the Secretary.

S. Quality Assurance System (Sec.  441.585)

    We proposed to require that States must establish and maintain a 
comprehensive, continuous quality assurance system, detailed in the 
State plan amendment, that includes a quality improvement strategy and 
employs measures for program performance and quality of care, standards 
for delivery models, mechanisms for discovery and remediation, and 
quality improvements proportionate to the benefit and number of 
individuals served. We proposed that the quality assurance system must 
include program performance measures, quality of care measures, 
standards for delivery models and methods that maximize consumer choice 
and control. We also required that States elicit and incorporate 
feedback from key stakeholders to improve the quality of the CFC 
benefit and that States must collect and report on monitoring, 
remediation, and quality improvements related to information defined in 
the State's quality improvement strategy.
    Comment: Several commenters commended the requirement that the 
quality assurance system be detailed in the CFC SPA.
    Response: We appreciate the support of this requirement.
    Comment: Several commenters noted that it is crucial that the 
quality management system utilized for CFC reflect the participant 
direction philosophy and recommended that the quality system resemble 
what is seen in sections 1915(i) and 1915(j) of the Act. The commenter 
indicated that special attention and/or assistance may be needed to 
ensure agencies administering CFC implement quality assurance and 
measurement techniques that build upon the participant direction 
paradigm.
    Response: We appreciate the commenters' views and agree that the 
perspective of the individuals receiving CFC attendant services and 
supports is an important aspect to consider. We believe the requirement 
to incorporate stakeholder feedback will complement the other elements 
of the participant direction philosophy included in CFC. While certain 
aspects of the CFC quality assurance system were set forth in the 
statute, similar measures are required for other Medicaid programs 
including sections 1915(c), 1915(i) and 1915(j) of the Act, and we 
anticipate that States will leverage their current systems to meet the 
requirements for CFC where possible.
    Comment: Multiple commenters suggested additional requirements for 
the quality assurance system including the following:
     Modification of the program performance measures to 
capture achievement of individuals' outcomes and goals identified in 
the service plan;
     Indication of the choice of location where the services 
are provided such as home, school, work or other;
     Collection of type of living situation such as group home, 
family home, individual's home or other in Sec.  441.585(a)(1)(iii);
     Specification of the choice of institution or community;
     Collection of a core set of functional indicators which 
are representative of the full range of functional limitations for the 
CFC population;
     Implementation of measures of consumer satisfaction and 
consumer experience;
     Measurement and reporting of barriers to achievement of 
individual outcomes and goals and how the State intends to address and 
remove any identified barriers;
     Collection and monitoring of the difference between the 
number of personal attendant care hours scheduled or authorized in each 
qualified individual's service plan and the hours of the scheduled type 
of service that are actually delivered to the qualified individual;
     Implementation of a program performance measure called 
``gaps in service'' which they believe would allow States to document, 
gauge and address service gaps;
     Implementation of standards for services and supports;
     Measurement of the numbers individuals served both in 
terms of the number of individuals eligible to receive CFC, and in 
terms of the individuals receiving all of the various CFC services;
     Measurement of the numbers of shifts that went unstaffed;
     Measurement of the general availability, turnover and 
retention of attendant staffing;
     Measurement of access to services on the basis of fields 
identified in Sec.  441.580(c);
     Measurement of race, ethnicity, limited English 
proficiency, and type of residence;
     Evaluation of whether the payment methodologies for 
attendant services and supports are sufficient for developing and 
sustaining an adequate workforce;
     Measurement of the impact direct care workforce wages have 
on the access consumers have to a wide range of reliable, timely home 
and community-based services;
     Analysis of workforce quality and stability; and
     Development and implementation of program integrity 
measures to evaluate the validity of individual eligibility, 
appropriateness of the care plan, and propriety of payments to 
caregivers.
    Response: We appreciate the commenters' suggestions regarding 
additional requirements to be included in States' quality assurance 
systems for CFC. As noted in previous sections, we are working to 
streamline the various HCBS requirements and expectations where 
possible across Medicaid HCBS programs. We are presently working with 
stakeholders to better understand the most effective and efficient 
method to assure the health and welfare of individuals with long term 
services and support needs, and to maximize quality across Medicaid 
HCBS authorities. We are considering the feedback from stakeholders, 
including the feedback received regarding the proposed language for CFC 
and forthcoming section 1915(i) comments, and analyzing current 
statutory and regulatory guidance across applicable Medicaid 
authorities. Additional guidance will be provided to States regarding 
any streamlined approaches that are developed for utilization across 
Medicaid HCBS. For the purposes of this regulation and the 
implementation of CFC, we have revised the quality assurance system 
requirements to more closely align with requirements included in 
statute. We will consider these commenters' suggestions as the work 
continues to better understand the most effective and efficient method 
to assure the health and welfare of individuals with long term services 
and

[[Page 26889]]

support needs, and to maximize quality across Medicaid HCBS 
authorities.
    Comment: One commenter indicated that it is critical in a quality 
improvement framework to examine participant outcomes and suggested 
that CMS be more prescriptive in the assessment elements which will 
result in comparable data on which to monitor quality and compare 
outcomes across States over time. The commenter suggested that CMS 
consider identifying a standard set of measures that would be 
implemented across States as they believed that this would allow CMS to 
identify exemplary States that could serve as best practice examples, 
as well as identify those States that may require support to improve 
the provision of services to CFC participants. Another commenter 
recommended that CMS include a set of minimum measures in the 
regulation, stating that this will both ensure States are collecting 
core meaningful quality measures and also allow for comparison of 
different programs to help identify best practices. Several commenters 
indicated that States' continuous quality assurance systems must be 
designed to measure and report on achievement of individual outcomes 
and goals expressed by beneficiaries in their person-centered services 
and supports plans.
    Response: We agree with the commenters that individual outcomes are 
an important component to consider in terms of quality improvement and 
quality assurance, particularly as they relate to specific services. We 
expect that States' quality assurance systems will utilize the 
information present in service plans to inform how needs are being met 
across the program and to see where improvements need to be made. As 
noted earlier, we have modified the Person-Centered Service Plan 
section to include individually identified goals and desired outcomes. 
States have the flexibility to incorporate additional measures above 
what is required through this regulation. Also, as mentioned in the 
assessment section, we are currently working to determine universal 
core elements to include in an assessment for consistency across 
Medicaid HCBS programs. Based on multiple comments and the 
acknowledgement that additional policy work is necessary to maximize 
the extent to which consistency can exist across the Medicaid programs 
as it relates to assessments for HCBS programs, we revised the 
assessment requirements to reflect the broad requirements in statute. 
Our intent is to require any finalized universal core elements that are 
developed to be incorporated into the assessment of functional need for 
CFC and other HCBS assessments as determined by CMS.
    We also appreciate the commenters' suggestions regarding standard 
sets of quality measures. As noted, we are presently working with 
stakeholders to better understand the most effective and efficient 
method to assure the health and welfare of individuals with long term 
services and support needs, and to maximize quality across Medicaid 
HCBS authorities. For the purposes of this regulation and the 
implementation of CFC, we have revised the quality assurance system 
requirements to more closely reflect the requirements included in 
statute.
    Comment: One commenter asked what the expectation is for measuring 
individuals' outcomes associated with the receipt of community-based 
attendant services and supports, particularly for the health and 
welfare of recipients of the service as stated at Sec.  441.585(a)(2). 
The commenter asked if this is a major evaluation element or if it 
could be satisfied with a survey. The commenter voiced concern that a 
broad-based assessment of need that includes elements over and above 
what is offered in the personal care program's purview may negatively 
impact the ability of States to develop and measure individual 
outcomes.
    Response: As noted above, individual outcomes are an important 
component to consider in terms of quality improvement and quality 
assurance, particularly as they relate to the services and supports 
provided under CFC. For these outcome measures being tied to assessment 
elements or the achievement of individual outcomes and goals expressed 
in the service plan, we expect that States' quality assurance systems 
will utilize the information present in service plans to inform how 
needs are being met across the program and to see where improvements 
need to be made. This information will also be a major component in the 
evaluation of CFC. States will need to describe how they plan to 
capture these outcomes in their quality assurance system. With regard 
to the commenter's concern regarding the assessment of need including 
elements over and above what is offered under CFC, as mentioned 
earlier, the assessment portion of the regulation has also been 
revised, as has the person-centered planning section, to remove the 
specified elements that went beyond the services and supports available 
under CFC. However, it is important to reiterate that our intent is to 
require any finalized universal core assessment elements that are 
developed to be incorporated into the assessment of functional need for 
CFC and other HCBS assessments as determined by CMS.
    Comment: One commenter indicated that the proposed rule deferred 
too much to States, was too vague to provide adequate protection for 
Medicaid beneficiaries, and did not incorporate the monitoring function 
that section 2401 of the Affordable Care Act included as a requirement 
for a State's quality assurance system. The commenter recommended more 
prescriptive requirements for this function.
    Response: We believe that the monitoring function was incorporated. 
Several protections for individuals are required under the quality 
assurance system, and the system as a whole must continuously monitor 
the quality of the program and incorporate feedback from key 
stakeholders. However, as mentioned above, we are continuing the work 
to determine quality approaches for utilization across Medicaid HCBS 
authorities. Therefore, for the purposes of this regulation and the 
implementation of CFC, we have revised the quality assurance system 
requirements to more closely reflect the requirements included in 
statute. Section 441.585(a)(2) now indicates that the quality assurance 
system must monitor the health and welfare of each individual who 
received CFC home and community-based attendant services and supports, 
including a process for the mandatory reporting, investigation, and 
resolution of allegations of neglect, abuse, or exploitation in 
connection with the provision of community-based attendant services and 
supports.
    Comment: One commenter noted that the data collection and quality 
assurance system should not be burdensome on consumers and they should 
not be surveyed every month with a lot of questions that get into 
unnecessary detail or invade the person's privacy.
    Response: We agree with the commenter.
    Comment: Several commenters commended the inclusion of the examples 
of measures in the preamble, including functional indicators and 
individual satisfaction. One commenter added that the perspective of 
service recipients and advocates will be critically important in making 
determinations as to ``quality,'' particularly as it pertains to 
personal goal and outcome achievement.
    Response: We believe that individual outcomes are an important 
component to consider in terms of quality improvement and quality 
assurance, particularly as they relate to the services and supports 
provided under CFC. With

[[Page 26890]]

regard to the perspective of individuals and advocates as referenced in 
the comment, States' quality assurance systems must also incorporate 
stakeholder feedback to improve the quality of the services offered 
under CFC. These aspects of CFC, along with the Development and 
Implementation Council, demonstrates the importance of the individual's 
perspective as it relates to services and supports provided under the 
program.
    Comment: One commenter asked CMS to clarify whether a State can 
delegate its quality assurance responsibilities to an outside entity 
while retaining ultimate responsibility, or if the State is required to 
facilitate these functions.
    Response: States continue to have the flexibility to design their 
quality assurance programs as long as all of the requirements included 
in the regulation for CFC are met. A State will need to determine 
whether they want an entity outside the State to be responsible for 
meeting this requirement.
    Comment: A few commenters voiced concern about the complexity of 
the proposed quality assurance system, pointed out that it is very 
similar to that for the section HCBS 1915(c) waiver programs, and 
referenced a previous letter they had sent to CMS that stated: ``The 
growing demands on States to implement increasingly complex quality 
management systems and improvement strategies are problematic because 
they: (a) Deviate significantly from the original intent of the quality 
initiative, that is, that CMS would review State systems of quality 
rather than monitor activities at the level of the individual 
beneficiary, (b) extend beyond the expectation specific in the HCBS 
Waiver Application Version 3.5 and related guidance, and (c) are being 
placed on States at a time when their fiscal and human resources are 
diminishing.'' Another commenter referenced this letter and asked that 
CMS clarify expectations regarding how section 1915(k) quality 
assurance is similar or dissimilar to section 1915(c) quality 
improvement, with specific attention paid to individual outcome 
measures and remediation activity level of detail.
    Response: As noted earlier, based on the feedback received during 
this process and the direction of ongoing work at CMS to develop a 
quality strategy that can be utilized to the extent possible across the 
Medicaid programs, we are revising this portion of the regulation to 
more closely align with the quality assurance system requirements 
included in statute.
    Comment: One commenter indicated that the proposed language is 
similar to quality assurance in HCBS waivers, which they believe is 
unsatisfactory because it has few, if any, quality of care standards, 
and is based on quality indicators that may or may not be meaningful 
and do not give guidance to consumers when there is a dispute about how 
services are to be provided. The commenter added that the quality 
assurance process seems to be hidden from consumers and that the data 
seems to be almost exclusively viewed by the State and CMS, with little 
or no involvement from consumers. The commenter recommended that 
information from the quality assurance process be shared with 
stakeholders, including but not limited to consumers and their 
representatives.
    Response: As mentioned above, we have revised the quality assurance 
system requirements to more closely align with the quality assurance 
system requirements included in statute. We have maintained the 
language that requires outcome measures associated with the receipt of 
community-based attendant services and supports, particularly for the 
health and welfare of recipients of this service. States may use a 
number of quality of care measures to meet that requirement. We also 
point the commenter to the final rule at Sec.  441.585(b), which 
requires that the quality assurance system employ methods that maximize 
consumer independence and control and will provide information about 
the provisions of quality improvement and assurance to each individual 
receiving such services and supports, and Sec.  441.585(c), which 
requires that the State elicit and incorporate feedback from 
individuals and their representatives, disability organizations, 
providers, families of disabled or elderly individuals, members of the 
community, and others to improve the quality of CFC.
    Comment: One commenter indicated that the quality improvement 
strategy needs to involve consumer and stakeholder input, and that 
measurements and remediation needs to consider the convenience to the 
consumer and their ability to understand the process, and not impinge 
unduly on consumer direction while improving service delivery. The 
commenter added that the Development and Implementation Council needs 
to be directly involved in monitoring and making program changes to 
implement quality improvement strategies. Several other commenters 
indicated that in addition to stakeholder feedback received through the 
Council, feedback from consumer satisfaction surveys and other means 
should be included in the quality assurance system and should be 
included in the rule. Another commenter urged CMS to clarify that 
feedback from aging organizations should also be incorporated in the 
quality assurance system.
    Response: We point the commenter to the final rule at Sec.  
441.585(b), which requires that the quality assurance system employ 
methods that maximize consumer independence and control, and will 
provide information about the provisions of quality improvement and 
assurance to each individual receiving such services and supports, and 
Sec.  441.585(c), which requires that the State elicit and incorporate 
feedback from individuals and their representatives, disability 
organizations, providers, families of disabled or elderly individuals, 
members of the community, and others to improve the quality of CFC. We 
expect that States will include the feedback of the Development and 
Implementation Council as part of this requirement as the membership of 
the Council will include many of the individuals specified at Sec.  
441.585(c). We agree with the commenter that consideration should be 
given to the methods that involve individuals' feedback. We agree that 
surveys may be a useful component with which to gain feedback, but 
caution that this process not be overly complicated or burdensome for 
individuals.
    Comment: One commenter asked that CMS clarify expectations for 
incorporating stakeholder feedback that may conflict with Federal 
regulations or State policy direction as defined in State statute, or 
drive increased expenditures for which a State lacks funding 
appropriation.
    Response: The requirement at section 1915(k)(3)(D)(ii) of the Act, 
which we proposed to implement at Sec.  441.585(b), requires that the 
quality assurance system incorporate feedback from consumers and their 
representatives, disability organizations, providers, families of 
disabled or elderly individuals, members of the community, and others. 
We are interpreting the use of the word ``incorporate'' to mean that 
feedback from these key stakeholders must be considered, but we do not 
expect that States must make changes based on each and every suggestion 
received. Should feedback received be in conflict with Federal 
regulations, States would not be expected to incorporate that feedback, 
in terms of making changes to the program, as Federal regulations must 
be adhered to for a State to be in compliance with such regulations. If 
feedback received was in conflict with

[[Page 26891]]

State policy direction, as defined in State statute, or would drive 
increased expenditures for which a State lacks funding appropriation, 
the State would need to make a choice as to whether to consider it.
    Comment: One commenter asked to what extent a State must ``maximize 
consumer independence and control'' as described at Sec.  
441.585(a)(4), asked for an example of what this means and what CMS' 
intent is with this language. The commenter asked for confirmation that 
this is all within the confines of the individual's health needs and 
requested that if this is the case that CMS include additional language 
to make this clear.
    Response: The statute and this regulation facilitate the ability 
for States to maximize individual independence and control throughout 
the CFC benefit, as illustrated by the inclusion of the language 
related to self-direction and person-centered planning, the Development 
and Implementation Council, and the stakeholder feedback requirements 
for the quality assurance system. While we do not set a minimum or 
maximum threshold that States must meet in terms of maximizing consumer 
independence and control, we expect that States make every effort to 
meet these requirements.
    Comment: Multiple commenters recommended that the language at 
section 1915(k)(3)(D)(ii) of the Act be used at paragraph (b) 
Stakeholder feedback, instead of the term ``key stakeholders.''
    Response: We appreciate the commenters' suggestion and have revised 
the language to include each entity specified in the statute.
    Comment: Several commenters stated that at paragraph (a)(2), the 
regulation applies the statutory requirement regarding reporting and 
investigation of abuse and neglect. The commenters commended the 
connection of abuse and neglect reporting to quality of care measures, 
but believed that the statute (at section 1915(k)(3)(D)(iii) of the 
Act) applies the requirement more broadly than to the more limited 
subpart of ``Quality of care measures'' specified in paragraph (a)(2). 
The commenters recommended that it be more broadly set forth as an 
independent requirement under the quality assurance system.
    Response: As mentioned above, we have revised the quality assurance 
system requirements to more closely align with the quality assurance 
system requirements included in statute. As such, Sec.  441.585 of the 
final rule is clear that this function applies more broadly than to the 
proposed limited subpart of ``quality of care measures.''
    Upon consideration of the public comments received, we are 
finalizing Sec.  441.585 with revision, to more closely mirror the 
quality assurance requirements specified in statute.

T. Increased Federal Financial Participation (Sec.  441.590)

    We proposed that beginning October 1, 2011, the FMAP applicable to 
the State will be increased by 6 percentage points for the provision of 
CFC home and community-based attendant services, under an approved 
State plan amendment.
    Comment: One commenter expressed concern that since States will 
receive 6 percentage point increase in FMAP for costs associated to the 
program, it would seem shortsighted for a State not to take advantage 
of this opportunity to expand community-based services which will 
decrease the amount of money needed for institutional care.
    Response: We appreciate the commenter's perspective.
    Comment: Many commenters indicated that States should be permitted 
to receive the enhanced FMAP provided in CFC concurrently with 
receiving other HCBS enhanced match rates such as those authorized by 
the Money Follows the Person Rebalancing Demonstration and the 
Balancing Incentive Payments Program.
    Response: We acknowledge the potential for States to receive 
enhanced FMAP under more than one program, and are willing to provide 
technical assistance to States interested in doing so.
    Comment: One commenter requested clarification regarding how CFC 
services would work in conjunction with similar efforts already under 
way to transition individuals from skilled nursing facilities to a home 
and community-based setting, such as section 1915(c) waivers and MFP. 
The commenter asked if waiver participants would be able to access CFC 
services and if so, whether the additional FMAP would apply to MFP or 
waiver services.
    Response: The enhanced FMAP applies to services authorized under 
the CFC program, but there is no prohibition on individuals receiving 
services through a section 1915(c) waiver or MFP program also receiving 
services through CFC.
    Comment: One commenter stated that this provision needs to be 
strong enough to encourage State participation and should be seen as an 
incentive for States to comply with the Olmstead Integration Mandate. 
The commenter indicated that it should not preclude other forms of 
enforcement of the law.
    Response: We agree with the commenter, and believe that the 6 
percentage point increase in Federal match provides incentives to the 
States to provide CFC to eligible individuals. This provision does not 
preclude other forms of enforcement of the Olmstead decision.
    Comment: Several commenters asked for clarification pertaining to 
what services and expenditures would be eligible for increased FMAP. 
One of these commenters requested that CMS clarify whether increased 
FFP is available for activities that support the delivery of ``home and 
community-based attendant services'' in context of CFC requirements. 
Two commenters requested that the enhanced reimbursement rate also be 
applied to assessments. One of these commenters further requested that 
CMS cover the coordination of the person-centered plan at the enhanced 
FMAP rate. Another commenter stated that their understanding is that 
attendant care would be eligible for the enhanced FMAP, and inquired 
whether additional services such as necessary case management or 
support brokerage services, administrative costs related to 
implementation of a fiscal agent structure, voluntary training for 
service participants, and the implementation of quality improvement 
mechanisms would be covered. One commenter requested clarification of 
the range of services eligible for the enhanced FMAP rate other than 
attendant services, such as case management, training, or personal 
agents. One commenter requested that CMS clarify that the additional 6 
percent FMAP would be applied to all services qualifying under CFC. 
This same commenter encouraged CMS to clarify that the 6 percent 
additional FMAP applies to the entire package of services to anyone 
qualified to receive them, not just those who are newly in receipt of 
attendant care services and supports provided under CFC. This commenter 
also asked whether a Personal Emergency Response System (PERS) would 
also qualify for enhanced reimbursement.
    Response: The authorizing legislation indicates that the additional 
6 percentage points in FMAP applies to CFC services and supports. We 
are interpreting ``services and supports'' broadly in this context, to 
include not only the services referenced at Sec.  441.520 (``Included 
services''), but also some of the activities referenced in the comments 
described above. Specifically, activities required by CFC that are 
performed for specific individuals, such as assessments, person-
centered planning, support system and Financial

[[Page 26892]]

Management Services will receive an additional 6 percentage points to 
the State's service match rate. Activities required by CFC that are 
done for the operation of the program in general, such as quality 
management, data collection, implementation of the Development and 
Implementation Council, and administrative costs related to 
implementation of a fiscal agent structure will not receive an 
additional 6 percentage points as they are administrative activities 
and are only eligible for the standard federal administrative matching 
rate of 50 percent available at Sec.  433.15(b)(7).
    Comment: One commenter stated that CMS should ensure that the ``and 
supports'' is added to the end of ``home and community-based attendant 
services'' to be consistent with the terminology in the statute.
    Response: We agree with this commenter and will add ``and 
supports'' to the end of ``home and community-based attendant care 
services'' in Sec.  441.590.
    Comment: One commenter requested that CMS clarify its expectations 
on how these services and expenditures are to be tracked to 
appropriately draw the higher FMAP. The commenter asked whether CMS 
will revise the CMS-64 form to reflect this State plan option.
    Response: The CMS-64 form has been modified to include a new CFC 
line item.
    Comment: Two commenters supported the 6 percent increase in FMAP, 
hoping that this will encourage States to select this option.
    Response: We appreciate the perspectives these commenters had in 
support of this provision of the rule.
    Comment: Two commenters requested confirmation of the duration of 
the 6 percent FMAP increase.
    Response: There is no time limit attached to the FMAP increase. The 
6 percentage point increase in FMAP is available to States for as long 
as States choose to provide services and supports under CFC.
    Comment: One commenter asked if the enhanced Federal match is 
available if a State decides to implement later than October, 2011 to 
coordinate implementation efforts with other efforts connected to 
Affordable Care Act.
    Response: The enhanced FMAP becomes available to a State upon the 
effective implementation date of their approved SPA for CFC, regardless 
of whether this date occurs after October 1, 2011.
    Comment: One commenter suggested that a portion of the increased 
Federal financial assistance that States receive be invested in 
workforce compensation, and investment that has been shown to improve 
recruitment and retention and thus quality of care.
    Response: States will continue to have flexibility with determining 
how they utilize the increased Federal funds that they will receive 
with the 6 percentage point enhanced match.
    Upon consideration of the public comments received, we are 
finalizing Sec.  441.590 with revision, to reflect that the enhanced 
match is available for CFC ``home and community-based attendant 
services and supports.''

III. Provisions of the Final Regulations

    Generally, this final regulation incorporates the February 25, 2011 
provisions of the proposed rule. We have outlined in section II of this 
preamble the revisions in response to the public comments. The 
provisions of this final regulation that differ from the proposed rule 
are as follows:
     At Sec.  441.505 we have revised the following 
definitions: Agency-provider model, backup systems and supports, 
individual representative, other models, Self-directed. This section 
has also been revised to add two new definitions: Individual, Self-
directed model with service budget.
     We have revised Sec.  441.510 to set forth the requirement 
that all individuals that meet an institutional level of care, allow 
for State administering agencies to permanently waive the annual level 
of care recertification if certain conditions are met and clarify 
income requirements
     We have revised Sec.  441.515 to combine (b) and (c) to 
more directly align with the statute.
     We have revised Sec.  441.520 to rename it ``Included 
services'' to align with the statute. We have revised Sec.  441.520(b) 
to clarify that (b)(1) and (2) that follow are both at the State's 
option, and to add the language from proposed 441.520(b)(3) ''linked to 
an assessed need or goal identified in the individual's person-centered 
service plan'' into the introductory section so that it is clear it 
applies to both (b)(1) and (2).
     We have revised Sec.  441.530 to remove the proposed home 
and community-based settings criteria. This section is now reserved for 
future use.
     We have revised Sec.  441.535 to add the ability for 
States to meet the face-to-face requirement through the use of 
telemedicine or other information technology medium if the certain 
conditions are met. We also added a new requirement at Sec.  441.535(d) 
indicating ``Other requirements as determined by the Secretary.''
     We have revised Sec.  441.540 to add a new requirement 
that the service plan require an assurance that the setting in which 
the individual resides is chosen by the individual, and to require a 
description of the setting alternatives available to the individual 
from which to choose. The proposed text at Sec.  441.540(b)(1) through 
(5) all shifted down by one number. We added requirements for 
administering the person-centered service plan. We also relocated some 
of the proposed rule language to the Support System section at Sec.  
441.555.
     We have revised Sec.  441.545 to expand the types of 
arrangements that may exist under the Agency provider model, to clarify 
the authority individuals have in the selection and dismissal of their 
service providers, to clarify the responsibilities of the Financial 
management entity and to add ``Other service delivery model'' as an 
additional service delivery model to allow States the option of 
proposing alternate delivery models for consideration.
     We have revised Sec.  441.550(e) to specify that 
determining the amount paid for services should be ``in accordance with 
State and Federal compensation requirements''.
     We have revised Sec.  441.555 to specify that support 
system activities must be available to all individuals regardless of 
the service delivery model; We also revised the requirements under this 
section to add additional beneficiary protections.
     We have revised Sec.  441.560(a)(3)(i), replacing the 
phrase ``change the budget'' with ``adjust amounts allocated to 
specific services and supports within the approved service budget.''
     We have revised Sec.  441.560 to make technical 
corrections.
     We have revised Sec.  441.565 to clarify which 
requirements apply to which service delivery model.
     We have revised Sec.  441.570 to clarify that this 
includes assuring the State's adherence to section 1903(i) of the Act 
that Medicaid payment shall not be made for items or services furnished 
by individuals or entities excluded from participating in the Medicaid 
Program. We also clarified that the Maintenance of Existing 
Expenditures requirements described at Sec.  441.570(b) pertains to the 
first full 12 months in which the CFC State plan amendment is 
implemented, and is limited to the expenditures for home and community-
based attendant services and supports provided under sections 1115, 
1905(a), 1915, or otherwise, under the Act, to individuals with 
disabilities or elderly individuals

[[Page 26893]]

attributable to the preceding 12-month period.
     We have revised Sec.  441.575 to align with the statutory 
requirement that a majority of the Council be comprised of individuals 
with disabilities, elderly individuals, and their representatives.
     We have revised Sec.  441.580 adding additional 
requirements for States to capture data on the impact of CFC services 
and supports on the physical and emotional health of individuals and 
other data as determined by the Secretary.
     We have revised Sec.  441.585 to more closely align with 
requirements set forth in statute.

V. Collection of Information Requirements

    We solicited public comment on each of the issues for the following 
sections of this document that contain information collection 
requirements (ICRs). We received several public comments on specific 
sections contained in the ICRs. The comments and our responses follow:

A. Assessment of Functional Need (Sec.  441.535)

    Section 441.535 requires States to conduct a face-to-face 
assessment of the individual's needs, strengths, preferences, and goals 
for the services and supports under CFC. States may use one or more 
processes and techniques to obtain this information about an 
individual. In Sec.  441.535(a)(1), the State must define the provider 
qualifications for health care professionals to use telemedicine or 
other information technology mediums for the assessment. In Sec.  
441.535(a)(3), the State must obtain informed consent from the 
individual to use telemedicine or other information technology mediums 
for the assessment. In addition to the initial assessment, States are 
required to conduct reassessments at least every 12 months (Sec.  
441.535(c)).
    The burden associated with the requirements under Sec.  441.535 is 
the time and effort it would take to conduct a face-to-face assessment 
of each individual's needs, strengths, preferences and goals for the 
services and supports under CFC. While this requirement is subject to 
the PRA, only a few States have expressed potential interest. 
Therefore, based on our informal discussions with States after the 
publication of the proposed rule, we believe that it would affect less 
than 10 entities on an annual basis; therefore, it is exempt from the 
PRA in accordance with 5 CFR 1320.3(c).
    The one-time burden associated with the requirements under Sec.  
441.535(a)(1) is the time and effort it would take the respondents to 
define the provider qualifications for health care professionals. While 
this requirement is subject to the PRA, only a few States have 
expressed potential interest. Therefore, based on our informal 
discussions with States after the publication of the proposed rule, we 
believe that it would affect less than 10 entities on an annual basis; 
therefore, it is exempt from the PRA in accordance with 5 CFR 
1320.3(c).
    The burden associated with the requirements under Sec.  
441.535(a)(3) is the time and effort it would take the respondents to 
obtain informed consent from the individual to use telemedicine or 
other information technology mediums for the assessment. While this 
requirement is subject to the PRA, only a few States have expressed 
potential interest. Therefore, based on our informal discussions with 
States after the publication of the proposed rule, we believe that it 
would affect less than 10 entities on an annual basis; therefore, it is 
exempt from the PRA in accordance with 5 CFR 1320.3(c).
    The burden associated with the requirements under Sec.  441.535(c) 
is the time and effort it would take the respondents to conduct 
reassessments at least every 12 months. While this requirement is 
subject to the PRA, only a few States have expressed potential 
interest. Therefore, based on our informal discussions with States 
after the publication of the proposed rule, we believe that it would 
affect less than 10 entities on an annual basis; therefore, it is 
exempt from the PRA in accordance with 5 CFR 1320.3(c).
    Comment: Several commenters recommended that CMS revisit the time 
estimates for the assessment of functional need and reassessment of 
need. The commenters had concerns regarding the one hour estimate 
provided in the proposed rule stating that an assessment could take up 
to three hours. The commenters added that this estimate also does not 
include travel time or the time necessary to analyze the information. 
It was also noted that while a reassessment may take less time than an 
initial assessment, it still would take up to two hours to perform.
    Response: Our estimates are based on the average time it may take 
for States to complete the assessment. This average would take into 
account the fact that some assessments may take less than one hour 
while some may take more than 1 hour. We do not believe the estimate of 
1 hour to complete a face-to-face interview to be unreasonable and did 
not receive overwhelming public comment to indicate otherwise. 
Therefore, we have not revised the collection of information estimate.

B. Person-Centered Service Plan (Sec.  441.540)

    Section 441.540 requires the State to conduct a person-centered 
planning process resulting in a person-centered service plan (Sec.  
441.540(b)), based on the assessment of functional need (Sec.  
441.535), in collaboration with the individual and the individual's 
authorized representative, if applicable. This service plan must be 
agreed to in writing by the individual and signed by all individuals 
and providers responsible for its implementation. In addition, States 
must provide a copy of the plan to the individual and anyone else 
responsible for the plan. In addition to the initial plan, States are 
required to review the plan at least every 12 months (Sec.  
441.540(c)).
    The burden associated with the requirements under Sec.  441.540(b) 
is the time and effort it would take to develop and finalize a written 
person-centered service plan for each individual, and to provide each 
individual and anyone else responsible for the plan a copy of that 
plan. While this requirement is subject to the PRA, only a few States 
have expressed potential interest. Therefore, based on our informal 
discussions with States after the publication of the proposed rule, we 
believe that it would affect less than 10 entities on an annual basis; 
therefore, it is exempt from the PRA in accordance with 5 CFR 
1320.3(c).
    The burden associated with the requirements under Sec.  441.540(c) 
is the time and effort it would take respondents to review each person-
centered service plan at least every 12 months and revise, when 
necessary. While this requirement is subject to the PRA, only a few 
States have expressed potential interest. Therefore, based on our 
informal discussions with States after the publication of the proposed 
rule, we believe that it would affect less than 10 entities on an 
annual basis; therefore, it is exempt from the PRA in accordance with 5 
CFR 1320.3(c).
    Comment: Several commenters recommended that CMS revisit the time 
estimates for development of the service plan. Several commenters 
stated that the CMS estimate of 2 hours to develop and finalize a 
service plan was too short. The commenters indicated that 2 hours is 
needed to develop the plan with an additional 2 hours, at minimum, to 
finish the plan. They added that the overall development of a person-
centered plan, including administrative tasks, could take up to 5 
hours.

[[Page 26894]]

    Response: Our estimates are based on the average time it may take 
for States to complete the requirements related to Sec.  441.540--
Person-centered Service plan. This average would take into account the 
fact that some of these components may take less than the estimated 
time while some may take more than we estimated. We estimated a total 
of 3.5 hours on average. We do not believe that this estimate is 
unreasonable and did not receive overwhelming public comment to 
indicate otherwise. Therefore, we have not revised the collection of 
information estimate.

C. Service Models (Sec.  441.545)

    Section 441.545 requires the State to choose one or more service 
delivery models for providing home and community-based attendant 
services and supports.
    Under the agency-provider model for CFC, in Sec.  441.545(a)(1), 
the State Medicaid agency or delegated entity, must enter into a 
contract or provider agreement with the entity providing the services 
and supports.
    Under the self-directed model with service budget, in Sec.  
441.545(b), the individual must be provided with a service budget based 
on the assessment of functional need.
    States must provide additional counseling, information, training, 
or assistance to individuals who have demonstrated that they cannot 
effectively manage the cash option described in Sec.  
441.545(b)(2)(iii). They must also provide the individual with the 
conditions under which the State would require an individual to use a 
financial management entity (Sec.  441.545(b)(2)(iv)).
    In Sec.  441.545(c), States have the option of proposing other 
service delivery models which must be defined by the State and approved 
by CMS.
    The burden associated with the requirements under Sec.  
441.545(a)(1) is the time and effort it would take to enter into a 
contract or provider agreement with the entity providing the services 
and supports. While this requirement is subject to the PRA, only a few 
States have expressed potential interest. Therefore, based on our 
informal discussions with States after the publication of the proposed 
rule, we believe that it would affect less than 10 entities on an 
annual basis; therefore, it is exempt from the PRA in accordance with 5 
CFR 1320.3(c).
    The burden associated with the requirements under Sec.  441.545(b) 
is the time and effort it would take the respondents to develop person-
centered service plans and service budgets. While this requirement is 
subject to the PRA, we believe that it would affect less than 10 
entities on an annual basis; therefore, it is exempt from the PRA in 
accordance with 5 CFR 1320.3(c).
    The burden associated with the requirements under Sec.  
441.545(b)(2) is the time and effort it would take the respondents to 
provide additional counseling, information, training, or assistance to 
individuals who have demonstrated that they cannot effectively manage 
the cash option and provide that individual with the conditions under 
which the State would require an individual to use a financial 
management entity. While this requirement is subject to the PRA, only a 
few States have expressed potential interest. Therefore, based on our 
informal discussions with States after the publication of the proposed 
rule, we believe that it would affect less than 10 entities on an 
annual basis; therefore, it is exempt from the PRA in accordance with 5 
CFR 1320.3(c).
    Comment: One commenter was concerned that the State burden will 
vary depending on the service model. The commenter indicated that 
implementing the ``self directed model with service budget'' would 
create additional burden for the State and that a State would view the 
complexity of managing self-directed service budgets with new service 
features such as direct cash, vouchers, and training to support 
consumers with the full employer responsibility, as a significant 
additional burden.
    Response: We appreciate the commenter's perspective. It is 
difficult to accurately estimate the total burden associated with any 
one of these models, as it would depend on the number of models a State 
chose to offer. While we acknowledge the additional burden that a State 
may have if they do not already offer such a model that could be 
leveraged to meet the requirements of CFC, we did not receive any 
estimates or additional comments that provide any compelling 
information to modify this section. Therefore, we will not be revising 
this collection of information estimate.

D. Support System (Sec.  441.555)

    For each service delivery model described under Sec.  441.545, 
States must provide or arrange for the provision of a support system 
to: Appropriately assess and counsel an individual or the individual's 
representative, if applicable, before enrollment (Sec.  441.535); 
provide appropriate information, counseling, training and assistance to 
ensure that an individual is able to manage the services and budgets 
(if applicable) (Sec.  441.545); establish conflict of interest 
standards for the assessments of functional need and the person-
centered service plan development process that apply to all individuals 
and entities, public or private (Sec.  441.540); and ensure that the 
responsibilities for assessment of functional need and person-centered 
service plan development are identified (Sec. Sec.  441.535 and 
441.540).
    In Sec.  441.555(b), States must specify in their State plan any 
tools or instruments used to mitigate identified risks. The one-time 
burden associated with the requirements under Sec.  441.555(b) is the 
time and effort it would take to amend their State plan by specifying 
any tools or instruments used to mitigate any identified risks. While 
this requirement is subject to the PRA, only a few States have 
expressed potential interest. Therefore, based on our informal 
discussions with States after the publication of the proposed rule, we 
believe that it would affect less than 10 entities on an annual basis; 
therefore, it is exempt from the PRA in accordance with 5 CFR 
1320.3(c).
    Comment: One commenter indicated that designing and implementing a 
support system that appropriately assesses and counsels an individual 
before an assessment, as well as providing information counseling, 
training, and assistance to the individual will require significant 
effort.
    Response: We appreciate the commenter's perspective and agree that 
the requirements will require State effort. We did not receive any 
estimates or additional comments that provide any compelling 
information to modify this section. Therefore, we will not be revising 
this collection of information estimate.

E. Service Budget Requirements (Sec.  441.560)

    For the self-directed model with a service budget, the State is 
required to develop and approve a service budget that is based on the 
assessment of functional need and person-centered service plan and must 
include all of the requirements in Sec.  441.560(a)(1) through (a)(6). 
In addition to developing a service budget, the methodology used to 
determine an individual's service budget amount must meet the 
requirements in Sec.  441.560(b) and must be included in the State plan 
(Sec.  441.560(b)(3)).
    In Sec.  441.560(c), the State must have procedures in place that 
will provide safeguards to individuals when the budgeted service amount 
is insufficient to meet the individual's needs. In Sec.  441.560(d), 
the State must have a

[[Page 26895]]

method of notifying individuals of the amount of any limit that applies 
to an individual's CFC services and supports. In Sec.  441.560(f), the 
State must have a procedure to adjust a budget when a reassessment 
indicates a change in an individual's medical condition, functional 
status, or living situation.
    The burden associated with the requirements under Sec.  441.560(a) 
is the time and effort it would take to develop and approve each 
service budget. While this requirement is subject to the PRA, only a 
few States have expressed potential interest. Therefore, based on our 
informal discussions with States after the publication of the proposed 
rule, we believe that it would affect less than 10 entities on an 
annual basis; therefore, it is exempt from the PRA in accordance with 5 
CFR 1320.3(c).
    The one-time burden associated with the requirements under Sec.  
441.560(b) is the time and effort it would take the respondents to 
develop a methodology used to determine an individual's service budget 
amount and include that methodology in the State plan. While this 
requirement is subject to the PRA, only a few States have expressed 
potential interest. Therefore, based on our informal discussions with 
States after the publication of the proposed rule, we believe that it 
would affect less than 10 entities on an annual basis; therefore, it is 
exempt from the PRA in accordance with 5 CFR 1320.3(c).
    The one-time burden associated with the requirements under Sec.  
441.560(c), (d), and (f) is the time and effort it would take the 
respondents to develop: Procedures that will provide safeguards to 
individuals when the budgeted service amount is insufficient to meet 
the individual's needs, a method for notifying individuals of the 
amount of any limit that applies to an individual's CFC services and 
supports, and a procedure to adjust a budget when a reassessment 
indicates a change in an individual's medical condition, functional 
status, or living situation. While this requirement is subject to the 
PRA, only a few States have expressed potential interest. Therefore, 
based on our informal discussions with States after the publication of 
the proposed rule, we believe that it would affect less than 10 
entities on an annual basis; therefore, it is exempt from the PRA in 
accordance with 5 CFR 1320.3(c).
    An additional burden associated with the requirements under Sec.  
441.560(d) is the time and effort it would take the respondents to 
develop and distribute each notice that specifies the amount of any 
limit for the individual's CFC services and supports. While this 
requirement is subject to the PRA, only a few States have expressed 
potential interest. Therefore, based on our informal discussions with 
States after the publication of the proposed rule, we believe that it 
would affect less than 10 entities on an annual basis; therefore, it is 
exempt from the PRA in accordance with 5 CFR 1320.3(c).
    Comment: One commenter believed that is would take far more than 16 
hours to develop communicate, test, and finalize budget procedures with 
input from interested parties and intradepartmental reviews.
    Response: We acknowledge the commenter's concern, however, the 
development requirement imposed is a onetime burden that will vary by 
State. We believe that the 16-hour estimate is an accurate reflection 
of the average time a State would take to develop their procedures. We 
did not receive any estimates or additional comments that provide any 
compelling information to modify this section. Therefore, we will not 
be revising this collection of information estimate.

F. Provider Qualifications (Sec.  441.565)

    For the agency provider model of CFC services and supports, States 
must develop system safeguards that include written adequacy 
qualifications for providers. In certain circumstances, this 
requirement may apply to other models.
    The one-time burden associated with the requirements under Sec.  
441.565(b) is the time and effort it would take to develop written 
adequacy qualifications for providers. While this requirement is 
subject to the PRA, only a few States have expressed potential 
interest. Therefore, based on our informal discussions with States 
after the publication of the proposed rule, we believe that it would 
affect less than 10 entities on an annual basis; therefore, it is 
exempt from the PRA in accordance with 5 CFR 1320.3(c).
    Comment: One commenter believed that 16 hours to develop system 
safeguards, including written adequacy qualifications for providers, 
was significantly insufficient. The commenter noted that the 
identification, analysis, and development of provider qualifications 
together with executing regulator or contractual mechanisms to control 
and/or oversee the risk in the individual's environment will require 
more than 16 hours to complete.
    Response: We disagree that 16 hours to develop system safeguards is 
insufficient. Our estimates are based on the average time it may take 
for States to fulfill these requirements. This would include States who 
may only have to slightly modify qualifications that are already in 
place and States who would have to create new qualifications. We did 
not receive any estimates or additional comments that provide any 
compelling information to modify this section. Therefore, we will not 
be revising this collection of information estimate.

G. Development and Implementation Council (Sec.  441.575(b))

    States are required to establish a Development and Implementation 
Council, and must consult and collaborate with the Council when 
developing and implementing a State plan amendment to provide home and 
community-based attendant services and supports.
    The burden associated with the requirements under Sec.  441.575(b) 
is the time and effort it would take to consult and collaborate with 
the Council when developing and implementing a State plan amendment to 
provide home and community-based attendant services and supports. While 
this requirement is subject to the PRA, only a few States have 
expressed potential interest. Therefore, based on our informal 
discussions with States after the publication of the proposed rule, we 
believe that it would affect less than 10 entities on an annual basis; 
therefore, it is exempt from the PRA in accordance with 5 CFR 
1320.3(c).

H. Data Collection (Sec.  441.580)

    Section 441.580 requires States to provide specified information 
regarding the provision of home and community-based attendant services 
and supports under CFC for each Federal fiscal year for which such 
services and supports are provided.
    The burden associated with the requirements under Sec.  441.580 is 
the time and effort it would take to provide specified information 
regarding the provision of home and community-based attendant services 
and supports for each fiscal year for which such services are provided. 
While this requirement is subject to the PRA, only a few States have 
expressed potential interest. Therefore, based on our informal 
discussions with States after the publication of the proposed rule, we 
believe that it would affect less than 10 entities on an annual basis; 
therefore, it is exempt from the PRA in accordance with 5 CFR 
1320.3(c).
    Comment: Many commenters expressed concerns pertaining to the 
estimated annual burden associated with the data collection 
requirement.
    Response: We have implemented data collection requirements as they 
were specified in the statute. We disagree that the annual burden will 
be significantly

[[Page 26896]]

more than estimated. While some States may need to revise their data 
collection systems, we do not believe that this will affect all States. 
Additionally, since much of this data collection is also a requirement 
under other authorities, we believe that States have the mechanisms in 
place to gather the requested information for reporting without 
excessive additional burden.
    Comment: One commenter believed that the data collection 
requirements set forth in the proposed regulations are reasonable. 
However, the commenter believed that the burden of the requirement to 
estimate the number of individuals served by type of disability, 
education level, and employment status in their State prior to the 
first fiscal year will be significant because it will likely require a 
manual effort from disparate sources. The commenter stated that once 
other major projects involving automation are implemented, the 
requirement for reporting in future years will become far less 
burdensome.
    Response: We appreciate this comment and the time that it may 
initially take States to set up systems to capture the required 
information. We agree that the initial data collection effort could be 
significant; however, as systems are put in place to capture this data 
we are confident that the time associated with data collection will be 
significantly reduced.
    Comment: One commenter believed that the requirement to report 
whether specific individuals were previously served in other programs 
or waivers is significant because it requires the development of ad-hoc 
reporting and report validation system which is not currently produced. 
The commenter stated that the estimated annual burden associated with 
this requirement will be significantly more than 24 hours or $576 per 
State for the initial year.
    Response: We appreciate this commenter's perspective. Our estimates 
are based on the average time it may take for States to fulfill these 
requirements. This would include States who may only have to slightly 
modify or determine how to leverage current data collection methods and 
States that would have to create new methods or systems. We also 
believe that some of the data required could be retrieved by a State's 
MMIS. We did not receive any estimates or additional comments that 
provide any compelling information to modify this section. Therefore we 
will not be revising this collection of information estimate.

I. Quality Assurance System (Sec.  441.585)

    Section 441.585(a) requires each State to establish and maintain a 
comprehensive, continuous quality assurance system, detailed in the 
State plan amendment. In Sec.  441.585(b), States must provide 
information about the provisions of quality improvement and assurance 
to each individual receiving such services and supports. In Sec.  
441.585(c), States must elicit and incorporate feedback from 
individuals and their representatives, disability organizations, 
providers, families of disabled or elderly individuals, members of the 
community and others to improve the quality of the community-based 
attendant services and supports benefit.
    The burden associated with the requirements under Sec.  441.585(a) 
is the time and effort it would take to establish and maintain a 
comprehensive, continuous quality assurance system, detailed in the 
State plan amendment. While this requirement is subject to the PRA, 
only a few States have expressed potential interest. Therefore, based 
on our informal discussions with States after the publication of the 
proposed rule, we believe that it would affect less than 10 entities on 
an annual basis; therefore, it is exempt from the PRA in accordance 
with 5 CFR 1320.3(c).
    The burden associated with the requirements under Sec.  441.585(b) 
is the time and effort it would take the respondents to provide 
information about the provisions of quality improvement and assurance 
to each individual receiving such services and supports. While this 
requirement is subject to the PRA, only a few States have expressed 
potential interest. Therefore, based on our informal discussions with 
States after the publication of the proposed rule, we believe that it 
would affect less than 10 entities on an annual basis; therefore, it is 
exempt from the PRA in accordance with 5 CFR 1320.3(c).
    The burden associated with the requirements under Sec.  441.585(c) 
is the time and effort it would take the respondents to elicit and 
incorporate feedback from individuals and their representatives, 
disability organizations, providers, families of disabled or elderly 
individuals, members of the community and others to improve the quality 
of the community-based attendant services and supports benefit. While 
this requirement is subject to the PRA, only a few States have 
expressed potential interest. Therefore, based on our informal 
discussions with States after the publication of the proposed rule, we 
believe that it would affect less than 10 entities on an annual basis; 
therefore, it is exempt from the PRA in accordance with 5 CFR 
1320.3(c).
    Comment: One commenter believed that establishing and maintaining a 
comprehensive quality assurance system that includes a continuous 
quality assurance system, quality improvement strategy, and measures 
for program performance will exceed 100 hours for development. The cost 
will also be more than $2,400 annually.
    Response: We appreciate this commenter's perspective. Our estimates 
are based on the average time it may take for States to fulfill these 
requirements. This would include States who may only have to slightly 
modify or determine how to leverage current quality assurance systems 
and States that would have to create new systems. We did not receive 
any estimates or additional comments that provide any compelling 
information to modify this section. Therefore, we will not be revising 
this collection of information estimate.
    This document imposed information collection and recordkeeping 
requirements. Consequently, it was reviewed by the Office of Management 
and Budget under the authority of the Paperwork Reduction Act of 1995 
(44 U.S.C. 35).

VI. Regulatory Impact Analysis

A. Statement of Need

    This final rule implements section 2401 of the Affordable Care Act. 
The Secretary is to establish a new State plan option to provide home 
and community-based attendant services and supports at a 6 percentage 
point increase in Federal matching payments for expenditures related to 
the provision of services under this option. Section 2401 of the 
Affordable Care Act, entitled ``Community First Choice Option,'' adds a 
new section 1915(k) of the Act that allows States, at their option, to 
provide home and community-based attendant services and supports under 
their State plan beginning October 1, 2011.

B. Overall Impact

    We have examined the impacts of this rule as required by Executive 
Order 12866 on Regulatory Planning and Review (September 30, 1993), 
Executive Order 13563 on Improving Regulation and Regulatory Review 
(January 18, 2011), the Regulatory Flexibility Act (RFA) (September 19, 
1980, Pub. L. 96-354), section 1102(b) of the Social Security Act, 
section 202 of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-
4), Executive Order 13132 on Federalism (August 4, 1999), and the 
Congressional Review Act (5 U.S.C. 804(2)).

[[Page 26897]]

    Executive Orders 12866 and 13563 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). Executive 
Order 13563 emphasizes the importance of quantifying both costs and 
benefits, of reducing costs, of harmonizing rules, and of promoting 
flexibility. This final rule has been designated an ``economically'' 
significant rule, under section 3(f)(1) of Executive Order 12866 and a 
major rule under the Congressional Review Act. Accordingly, the rule 
has been reviewed by the Office of Management and Budget.
    Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) also 
requires that agencies assess anticipated costs and benefits before 
issuing any rule whose mandates require spending in any 1 year of $100 
million in 1995 dollars, updated annually for inflation. In 2012, that 
threshold is approximately $139 million. Because this rule does not 
mandate State participation in section 1915(k) of the Act, there is no 
obligation for the State to make any change to their Medicaid program. 
Therefore, we estimate this final rule will not mandate expenditures in 
the threshold amount of $139 million in any 1 year.
    Executive Order 13132 establishes certain requirements that an 
agency must meet when it promulgates a final rule that imposes 
substantial direct requirement costs on State and local governments, 
preempts State law, or otherwise has Federalism implications. As stated 
above, this final rule does not have a substantial effect on State and 
local governments.
    This final rule is estimated to have an economic impact of $1.3 
billion in fiscal year 2012, with the Federal and State shares 
reflecting $820 million and $480 million, respectively. The economic 
impact estimates presented in this final rule differ from those 
originally presented in the proposed rule, primarily due to the final 
rule revising Sec.  441.510 to require, that in order to receive CFC 
services, all individuals, regardless of income, must be determined 
annually to meet an institutional level of care.

                          Table 1--Medicaid Costs for the Community First Choice Option
                                               [In $ millions] \1\
----------------------------------------------------------------------------------------------------------------
                                                                                                        FY 2016
                                                            FY 2012    FY 2013    FY 2014    FY 2015      \2\
----------------------------------------------------------------------------------------------------------------
Federal Medicaid.........................................       $820     $1,060     $1,815     $2,585     $3,520
State Medicaid...........................................        480        620      1,061      1,511      2,058
----------------------------------------------------------------------------------------------------------------
\1\ Figures are rounded to the nearest $1 million and assume increased State participation per fiscal year.
\2\ The proposed rule included cost estimates for FY 2012 through FY 2015. The cost estimates in this final rule
  are for FY 2012 through FY 2016.

    This final rule provides States with additional flexibility to 
finance home and community-based services by establishing a new CFC 
Option at an increased FMAP for attendant services and supports. 
Because of this enhanced flexibility, and the fact that a majority of 
States may already provide attendant services and supports through 
optional medical assistance services in its Medicaid State plan, HCBS 
waiver programs or both, we anticipate that each State will likely 
compare and decide which vehicle provides greater benefits and 
stability to their overall Medicaid program. As such, at this time it 
is very difficult to accurately predict how many States will choose to 
adopt the CFC Option, and how a State's election to exercise this 
option will influence other parts of its Medicaid program. However, for 
purposes of this RIA, we assume a gradual growth in the number of 
States adopting this option, so that, by FY 2016, 30 percent of 
eligible persons who would want this coverage would reside in States 
that offer it.

C. Anticipated Effects

1. Effects on Medicaid Recipients
    We anticipate that a large number of Medicaid recipients will be 
affected. We believe the additional option to provide attendant care 
services and supports at the increased FMAP will likely have 
significant positive effects on Medicaid recipients, particularly on 
their demand for these services. We anticipate that the provisions of 
the final rule will likely increase State and local accessibility to 
services that augment the quality of life for individuals through a 
person-centered plan of service and various quality assurances, all at 
a potentially lower per capita cost relative to alternative care-
settings.
2. Effects on Other Providers
    We anticipate that this final rule will increase the demand for 
attendant care services and supports. We believe this effect will be 
beneficial to providers, particularly providers of attendant care 
services and supports. Additionally, if the increase in demand for such 
services is sufficient, the number of providers of such services may 
increase.
3. Impact on Small Entities
    The RFA requires agencies to analyze options for regulatory relief 
of small entities, if a rule has a significant impact on a substantial 
number of small entities. For purposes of the RFA, small entities 
include small businesses, nonprofit organizations, and small 
governmental jurisdictions. Most hospitals and most other health care 
providers and suppliers are small entities, either by being nonprofit 
organizations or by meeting the SBA definition of a small business and 
having revenues of less than $7 million to $34.5 million in any 1 year. 
(For details, see the Small Business Administration's Table of Size 
Standards at http://www.sba.gov/sites/default/files/Size_Standards_Table.pdf.) Individuals and States are not included in the definition 
of a small entity. We are not preparing an analysis for the RFA because 
the Secretary has determined that this final rule does not have a 
significant impact on a substantial number of small entities.
    In addition, section 1102(b) of the Act requires us to prepare a 
regulatory impact analysis if a rule may have a significant impact on 
the operations of a substantial number of small rural hospitals. This 
analysis must conform to the provisions of section 604 of the RFA. For 
purposes of section 1102(b) of the Act, we define a small rural 
hospital as a hospital that is located outside of a metropolitan 
statistical area and has fewer than 100 beds. We are not preparing an 
analysis for section 1102(b) of the Act because the Secretary has 
determined that this final rule will not have a significant impact on 
the operations of a substantial number of small rural hospitals.

[[Page 26898]]

4. Effects on the Medicaid Program Expenditures
    Varying State definitions of personal care services and rules 
concerning who may furnish them make it difficult to estimate 
accurately the potential increases in expenditures for States that 
choose to adopt CFC under section 1915(k) of the Act. While we 
specifically solicited comments on the number of States that were 
likely to participate in CFC, we received none.
    Table 1 above provides estimates of the anticipated Medicaid 
program expenditures associated with furnishing attendant care services 
and supports. The estimates were made using various assumptions about 
increases in service utilization and costs, as well as assumptions 
about the induced utilization that may result from the CFC option. We 
have allowed for possible State incentives due to the increased FMAP 
rate, as well as for the possibility of savings due to beneficiaries 
being diverted from nursing facility use.

D. Alternatives Considered

    In finalizing the policies set forth in this rule, we reviewed all 
public comments submitted within the allowed time.
    We received a large number of comments on the proposed definition 
of home and community-based settings. We met with Federal partners to 
discuss the concerns raised by public commenters. We also reviewed 
several documents and policy papers prepared by advocacy groups, 
independent policy groups, and other stakeholders for information on 
the types of settings personal attendant services are provided in. 
Additionally, we looked to the Olmstead Decision and the ADA as the 
framework onto which we built our definition.
    After much discussion and consideration of the impact of each 
option discussed, we concluded that further discussion and 
consideration on this issue is necessary. Therefore, we are not 
finalizing the language proposed at Sec.  441.530. Rather, we will 
issue a new proposed regulation that will establish setting criteria 
for CFC developed as a result of the comments received.

E. Accounting Statement

    As required by OMB Circular A-4 (available at: http://www.whitehouse.gov/sites/default/files/omb/assets/omb/circulars/a004/a-4.pdf), we have prepared an accounting statement showing the 
classification of estimated transfers, benefits and costs associated 
with section 1915(k) services offered by qualified providers in the 
Medicaid program, as a result of this final rule.

                     Table 2--Accounting Statement: Estimated Transfers, Benefits, and Costs
                                             [FYs 2012 to 2016] \3\
----------------------------------------------------------------------------------------------------------------
                       Category                                                Transfers
----------------------------------------------------------------------------------------------------------------
                                      Year dollar                    Discount rate
 Annualized monetized transfers  ---------------------------------------------------------------  Period covered
                                          2012                  7%                   3%
----------------------------------------------------------------------------------------------------------------
                                  Primary Estimate...  $1.87 Billion......  $1.92 Billion......    FYs 2012-2016
----------------------------------------------------------------------------------------------------------------
From/To.........................                Federal Government to Medicaid Qualified Providers.
----------------------------------------------------------------------------------------------------------------


 
            Category                                                 Transfers
----------------------------------------------------------------------------------------------------------------
                                      Year dollar                    Discount rate
 Annualized monetized transfers  ---------------------------------------------------------------  Period covered
                                          2012                  7%                   3%
----------------------------------------------------------------------------------------------------------------
                                  Primary Estimate...  $1.09 Billion......  $1.12 Billion......    FYs 2012-2016
----------------------------------------------------------------------------------------------------------------
From/To.........................                State Governments to Medicaid Qualified Providers.
----------------------------------------------------------------------------------------------------------------
            Category                                                 Benefits
----------------------------------------------------------------------------------------------------------------
Qualitative Benefits............  The CFC option will increase State and local accessibility to services which
                                   in turn improves, through a person-centered plan of service with various
                                   quality assurances, the quality of life for individuals, and reduces the
                                   financial strain on States and Medicaid participants.
----------------------------------------------------------------------------------------------------------------
            Category                                                   Costs
----------------------------------------------------------------------------------------------------------------
Administrative Burden Costs.....   The administrative burden costs are presented in the Paperwork Reduction Act
                                                            section of this final rule.
----------------------------------------------------------------------------------------------------------------
\3\ The proposed rule included cost estimates for FY 2012 through FY 2015. The cost estimates in this final rule
  are for FY 2012 through FY 2016.

List of Subjects in 42 CFR Part 441

    Aged, Family planning, Grant programs--health, Infants and 
children, Medicaid, Penalties, Reporting and recordkeeping 
requirements.

    The Centers for Medicare & Medicaid Services amends 42 CFR Chapter 
IV as follows:

PART 441--SERVICES: REQUIREMENTS AND LIMITS APPLICABLE TO SPECIFIC 
SERVICES

0
1. The authority citation for part 441 continues to read as follows:

    Authority: Sec 1102 of the Social Security Act (42.U.S.C. 1302)

0
2. Part 441 is amended by adding subpart K to read as follows:
Subpart K--Home and Community-Based Attendant Services and Supports 
State Plan Option (Community First Choice)
Sec.
441.500 Basis and scope.
441.505 Definitions.
441.510 Eligibility.
441.515 Statewideness.
441.520 Included services.
441.525 Excluded services.
441.530 [Reserved]
441.535 Assessment of functional need.
441.540 Person-centered service plan.

[[Page 26899]]

441.545 Service models.
441.550 Service plan requirements for self-directed model with 
service budget.
441.555 Support system.
441.560 Service budget requirements.
441.565 Provider qualifications.
441.570 State assurances.
441.575 Development and Implementation Council.
441.580 Data collection.
441.585 Quality assurance system.
441.590 Increased Federal financial participation.

Subpart K--Home and Community-Based Attendant Services and Supports 
State Plan Option (Community First Choice)


Sec.  441.500  Basis and scope.

    (a) Basis. This subpart implements section 1915(k) of the Act, 
referred to as the Community First Choice option (hereafter Community 
First Choice), to provide home and community-based attendant services 
and supports through a State plan.
    (b) Scope. Community First Choice is designed to make available 
home and community-based attendant services and supports to eligible 
individuals, as needed, to assist in accomplishing activities of daily 
living (ADLs), instrumental activities of daily living (IADLs), and 
health-related tasks through hands-on assistance, supervision, or 
cueing.


Sec.  441.505  Definitions.

    As used in this subpart:
    Activities of daily living (ADLs) means basic personal everyday 
activities including, but not limited to, tasks such as eating, 
toileting, grooming, dressing, bathing, and transferring.
    Agency-provider model means a method of providing Community First 
Choice services and supports under which entities contract for or 
provide through their own employees, the provision of such services and 
supports, or act as the employer of record for attendant care providers 
selected by the individual enrolled in Community First Choice.
    Backup systems and supports means electronic devices used to ensure 
continuity of services and supports. These items may include an array 
of available technology, personal emergency response systems, and other 
mobile communication devices. Persons identified by an individual can 
also be included as backup supports.
    Health-related tasks means specific tasks related to the needs of 
an individual, which can be delegated or assigned by licensed health-
care professionals under State law to be performed by an attendant.
    Individual means the eligible individual and, if applicable, the 
individual's representative.
    Individual's representative means a parent, family member, 
guardian, advocate, or other person authorized by the individual to 
serve as a representative in connection with the provision of CFC 
services and supports. This authorization should be in writing, when 
feasible, or by another method that clearly indicates the individual's 
free choice. An individual's representative may not also be a paid 
caregiver of an individual receiving services and supports under this 
subpart.
    Instrumental activities of daily living (IADLs) means activities 
related to living independently in the community, including but not 
limited to, meal planning and preparation, managing finances, shopping 
for food, clothing, and other essential items, performing essential 
household chores, communicating by phone or other media, and traveling 
around and participating in the community.
    Other models means methods, other than an agency-provider model or 
the self-directed model with service budget, for the provision of self-
directed services and supports, as approved by CMS.
    Self-directed means a consumer controlled method of selecting and 
providing services and supports that allows the individual maximum 
control of the home and community-based attendant services and 
supports, with the individual acting as the employer of record with 
necessary supports to perform that function, or the individual having a 
significant and meaningful role in the management of a provider of 
service when the agency-provider model is utilized. Individuals 
exercise as much control as desired to select, train, supervise, 
schedule, determine duties, and dismiss the attendant care provider.
    Self-directed model with service budget means methods of providing 
self-directed services and supports using an individualized service 
budget. These methods may include the provision of vouchers, direct 
cash payments, and/or use of a fiscal agent to assist in obtaining 
services.


Sec.  441.510  Eligibility.

    To receive Community First Choice services and supports under this 
section, an individual must meet the following requirements:
    (a) Be eligible for medical assistance under the State plan;
    (b) As determined annually--
    (1) Be in an eligibility group under the State plan that includes 
nursing facility services; or
    (2) If in an eligibility group under the State plan that does not 
include such nursing facility services, have an income that is at or 
below 150 percent of the Federal poverty level (FPL). In determining 
whether the 150 percent of the FPL requirement is met, States must 
apply the same methodologies as would apply under their Medicaid State 
plan, including the same income disregards in accordance with section 
1902(r)(2) of the Act; and,
    (c) Receive a determination, at least annually, that in the absence 
of the home and community-based attendant services and supports 
provided under this subpart, the individual would otherwise require the 
level of care furnished in a hospital, a nursing facility, an 
intermediate care facility for the mentally retarded, an institution 
providing psychiatric services for individuals under age 21, or an 
institution for mental diseases for individuals age 65 or over, if the 
cost could be reimbursed under the State plan. The State administering 
agency may permanently waive the annual recertification requirement for 
an individual if:
    (1) It is determined that there is no reasonable expectation of 
improvement or significant change in the individual's condition because 
of the severity of a chronic condition or the degree of impairment of 
functional capacity; and
    (2) The State administering agency, or designee, retains 
documentation of the reason for waiving the annual recertification 
requirement.
    (d) For purposes of meeting the criterion under paragraph (b) of 
this section, individuals who qualify for medical assistance under the 
special home and community-based waiver eligibility group defined at 
section 1902(a)(10)(A)(ii)(VI) of the Act must meet all section 1915(c) 
requirements and receive at least one home and community-based waiver 
service per month.
    (e) Individuals receiving services through Community First Choice 
will not be precluded from receiving other home and community-based 
long-term care services and supports through other Medicaid State plan, 
waiver, grant or demonstration authorities.


Sec.  441.515  Statewideness.

    States must provide Community First Choice to individuals:
    (a) On a statewide basis.
    (b) In a manner that provides such services and supports in the 
most integrated setting appropriate to the

[[Page 26900]]

individual's needs, and without regard to the individual's age, type or 
nature of disability, severity of disability, or the form of home and 
community-based attendant services and supports that the individual 
requires to lead an independent life.


Sec.  441.520  Included services.

    (a) If a State elects to provide Community First Choice, the State 
must provide all of the following services:
    (1) Assistance with ADLs, IADLs, and health-related tasks through 
hands-on assistance, supervision, and/or cueing.
    (2) Acquisition, maintenance, and enhancement of skills necessary 
for the individual to accomplish ADLs, IADLs, and health-related tasks.
    (3) Backup systems or mechanisms to ensure continuity of services 
and supports, as defined in Sec.  441.505 of this subpart.
    (4) Voluntary training on how to select, manage and dismiss 
attendants.
    (b) At the State's option, the State may provide permissible 
services and supports that are linked to an assessed need or goal in 
the individual's person-centered service plan. Permissible services and 
supports may include, but are not limited to, the following:
    (1) Expenditures for transition costs such as rent and utility 
deposits, first month's rent and utilities, bedding, basic kitchen 
supplies, and other necessities linked to an assessed need for an 
individual to transition from a nursing facility, institution for 
mental diseases, or intermediate care facility for the mentally 
retarded to a home and community-based setting where the individual 
resides;
    (2) Expenditures relating to a need identified in an individual's 
person-centered service plan that increases an individual's 
independence or substitutes for human assistance, to the extent that 
expenditures would otherwise be made for the human assistance.


Sec.  441.525  Excluded services.

    Community First Choice may not include the following:
    (a) Room and board costs for the individual, except for allowable 
transition services described in Sec.  441.520(b)(1) of this subpart.
    (b) Special education and related services provided under the 
Individuals with Disabilities Education Act that are related to 
education only, and vocational rehabilitation services provided under 
the Rehabilitation Act of 1973.
    (c) Assistive devices and assistive technology services, other than 
those defined in Sec.  441.520(a)(3) of this subpart, or those that 
meet the requirements at Sec.  441.520(b)(2) of this subpart.
    (d) Medical supplies and medical equipment, other than those that 
meet the requirements at Sec.  441.520(b)(2) of this subpart.
    (e) Home modifications, other than those that meet the requirements 
at Sec.  441.520(b) of this subpart.


Sec.  441.530  [Reserved]


Sec.  441.535  Assessment of functional need.

    States must conduct a face-to-face assessment of the individual's 
needs, strengths, preferences, and goals for the services and supports 
provided under Community First Choice in accordance with the following:
    (a) States may use one or more processes and techniques to obtain 
information, including telemedicine, or other information technology 
medium, in lieu of a face-to-face assessment if the following 
conditions apply:
    (1) The health care professional(s) performing the assessment meet 
the provider qualifications defined by the State, including any 
additional qualifications or training requirements for the operation of 
required information technology;
    (2) The individual receives appropriate support during the 
assessment, including the use of any necessary on-site support-staff; 
and
    (3) The individual is provided the opportunity for an in-person 
assessment in lieu of one performed via telemedicine.
    (b) Assessment information supports the determination that an 
individual requires Community First Choice and also supports the 
development of the person-centered service plan and, if applicable, 
service budget.
    (c) The assessment of functional need must be conducted at least 
every 12 months, as needed when the individual's support needs or 
circumstances change significantly necessitating revisions to the 
person-centered service plan, and at the request of the individual.
    (d) Other requirements as determined by the Secretary.


Sec.  441.540  Person-centered service plan.

    (a) Person-centered planning process. The person-centered planning 
process is driven by the individual. The process--
    (1) Includes people chosen by the individual.
    (2) Provides necessary information and support to ensure that the 
individual directs the process to the maximum extent possible, and is 
enabled to make informed choices and decisions.
    (3) Is timely and occurs at times and locations of convenience to 
the individual.
    (4) Reflects cultural considerations of the individual.
    (5) Includes strategies for solving conflict or disagreement within 
the process, including clear conflict-of-interest guidelines for all 
planning participants.
    (6) Offers choices to the individual regarding the services and 
supports they receive and from whom.
    (7) Includes a method for the individual to request updates to the 
plan.
    (8) Records the alternative home and community-based settings that 
were considered by the individual.
    (b) The person-centered service plan. The person-centered service 
plan must reflect the services and supports that are important for the 
individual to meet the needs identified through an assessment of 
functional need, as well as what is important to the individual with 
regard to preferences for the delivery of such services and supports. 
Commensurate with the level of need of the individual, and the scope of 
services and supports available under Community First Choice, the plan 
must:
    (1) Reflect that the setting in which the individual resides is 
chosen by the individual.
    (2) Reflect the individual's strengths and preferences.
    (3) Reflect clinical and support needs as identified through an 
assessment of functional need.
    (4) Include individually identified goals and desired outcomes.
    (5) Reflect the services and supports (paid and unpaid) that will 
assist the individual to achieve identified goals, and the providers of 
those services and supports, including natural supports. Natural 
supports cannot supplant needed paid services unless the natural 
supports are unpaid supports that are provided voluntarily to the 
individual in lieu of an attendant.
    (6) Reflect risk factors and measures in place to minimize them, 
including individualized backup plans.
    (7) Be understandable to the individual receiving services and 
supports, and the individuals important in supporting him or her.
    (8) Identify the individual and/or entity responsible for 
monitoring the plan.
    (9) Be finalized and agreed to in writing by the individual and 
signed by all individuals and providers responsible for its 
implementation.
    (10) Be distributed to the individual and other people involved in 
the plan.
    (11) Incorporate the service plan requirements for the self-
directed model

[[Page 26901]]

with service budget at Sec.  441.550, when applicable.
    (12) Prevent the provision of unnecessary or inappropriate care.
    (13) Other requirements as determined by the Secretary.
    (c) Reviewing the person-centered service plan. The person-centered 
service plan must be reviewed, and revised upon reassessment of 
functional need, at least every 12 months, when the individual's 
circumstances or needs change significantly, and at the request of the 
individual.


Sec.  441.545  Service models.

    A State may choose one or more of the following as the service 
delivery model to provide self-directed home and community-based 
attendant services and supports:
    (a) Agency-provider model. (1) The agency-provider model is a 
delivery method in which the services and supports are provided by 
entities, under a contract or provider agreement with the State 
Medicaid agency or delegated entity to provide services. Under this 
model, the entity either provides the services directly through their 
employees or arranges for the provision of services under the direction 
of the individual receiving services.
    (2) Under the agency-provider model for Community First Choice, 
individuals maintain the ability to have a significant role in the 
selection and dismissal of the providers of their choice, for the 
delivery of their specific care, and for the services and supports 
identified in their person-centered service plan.
    (b) Self-directed model with service budget. A self-directed model 
with a service budget is one in which the individual has both a person-
centered service plan and a service budget based on the assessment of 
functional need.
    (1) Financial management entity. States must make available 
financial management activities to all individuals with a service 
budget. The financial management entity performs functions including, 
but not limited to, the following activities:
    (i) Collect and process timesheets of the individual's attendant 
care providers.
    (ii) Process payroll, withholding, filing, and payment of 
applicable Federal, State, and local employment related taxes and 
insurance.
    (iii) Separately track budget funds and expenditures for each 
individual.
    (iv) Track and report disbursements and balances of each 
individual's funds.
    (v) Process and pay invoices for services in the person-centered 
service plan.
    (vi) Provide individual periodic reports of expenditures and the 
status of the approved service budget to the individual and to the 
State.
    (vii) States may perform the functions of a financial management 
entity internally or use a vendor organization that has the 
capabilities to perform the required tasks in accordance with all 
applicable requirements of the Internal Revenue Service.
    (2) Direct cash. States may disburse cash prospectively to 
individuals self-directing their Community First Choice services and 
supports, and must meet the following requirements:
    (i) Ensure compliance with all applicable requirements of the 
Internal Revenue Service, and State employment and taxation 
authorities, including but not limited to, retaining required forms and 
payment of FICA, FUTA and State unemployment taxes.
    (ii) Permit individuals using the cash option to choose to use the 
financial management entity for some or all of the functions described 
in paragraph (b)(1)(ii) of this section.
    (iii) Make available a financial management entity to an individual 
who has demonstrated, after additional counseling, information, 
training, or assistance that the individual cannot effectively manage 
the cash option described in this section.
    (iv) The State may require an individual to use a financial 
management entity, but must provide the individual with the conditions 
under which this option would be enforced.
    (3) Vouchers. States have the option to issue vouchers to 
individuals who self-direct their Community First Choice services and 
supports as long as the requirements in paragraphs (b)(2)(i) through 
(iv) of this paragraph are met.
    (c) Other service delivery models. States have the option of 
proposing other service delivery models. Such models are defined by the 
State and approved by CMS.


Sec.  441.550  Service plan requirements for self-directed model with 
service budget.

    The person-centered service plan under the self-directed model with 
service budget conveys authority to the individual to perform, at a 
minimum, the following tasks:
    (a) Recruit and hire or select attendant care providers to provide 
self-directed Community First Choice services and supports, including 
specifying attendant care provider qualifications.
    (b) Dismiss specific attendant care providers of Community First 
Choice services and supports.
    (c) Supervise attendant care providers in the provision of 
Community First Choice services and supports.
    (d) Manage attendant care providers in the provision of Community 
First Choice services and supports, which includes the following 
functions:
    (1) Determining attendant care provider duties.
    (2) Scheduling attendant care providers.
    (3) Training attendant care providers in assigned tasks.
    (4) Evaluating attendant care providers' performance.
    (e) Determining the amount paid for a service, support, or item, in 
accordance with State and Federal compensation requirements.
    (f) Reviewing and approving provider payment requests.


Sec.  441.555  Support system.

    For each service delivery model available, States must provide, or 
arrange for the provision of, a support system that meets all of the 
following conditions:
    (a) Appropriately assesses and counsels an individual before 
enrollment.
    (b) Provides appropriate information, counseling, training, and 
assistance to ensure that an individual is able to manage the services 
and budgets if applicable.
    (1) This information must be communicated to the individual in a 
manner and language understandable by the individual. To ensure that 
the information is communicated in an accessible manner, information 
should be communicated in plain language and needed auxiliary aids and 
services should be provided.
    (2) The support activities must include at least the following:
    (i) Person-centered planning and how it is applied.
    (ii) Range and scope of individual choices and options.
    (iii) Process for changing the person-centered service plan and, if 
applicable, service budget.
    (iv) Grievance process.
    (v) Information on the risks and responsibilities of self-
direction.
    (vi) The ability to freely choose from available home and 
community-based attendant providers, available service delivery models 
and if applicable, financial management entities.
    (vii) Individual rights, including appeal rights.
    (viii) Reassessment and review schedules.
    (ix) Defining goals, needs, and preferences of Community First 
Choice services and supports.
    (x) Identifying and accessing services, supports, and resources.
    (xi) Development of risk management agreements.

[[Page 26902]]

    (A) The State must specify in the State Plan amendment any tools or 
instruments used to mitigate identified risks.
    (B) States utilizing criminal or background checks as part of their 
risk management agreement will bear the costs of such activities.
    (xii) Development of a personalized backup plan.
    (xiii) Recognizing and reporting critical events.
    (xiv) Information about an advocate or advocacy systems available 
in the State and how an individual can access the advocate or advocacy 
systems.
    (c) Establishes conflict of interest standards for the assessments 
of functional need and the person-centered service plan development 
process that apply to all individuals and entities, public or private. 
At a minimum, these standards must ensure that the individuals or 
entities conducting the assessment of functional need and person-
centered service plan development process are not:
    (1) Related by blood or marriage to the individual, or to any paid 
caregiver of the individual.
    (2) Financially responsible for the individual.
    (3) Empowered to make financial or health-related decisions on 
behalf of the individual.
    (4) Individuals who would benefit financially from the provision of 
assessed needs and services.
    (5) Providers of State plan HCBS for the individual, or those who 
have an interest in or are employed by a provider of State plan HCBS 
for the individual, except when the State demonstrates that the only 
willing and qualified entity/entities to perform assessments of 
functional need and develop person-centered service plans in a 
geographic area also provides HCBS, and the State devises conflict of 
interest protections including separation of assessment/planning and 
HCBS provider functions within provider entities, which are described 
in the State plan, and individuals are provided with a clear and 
accessible alternative dispute resolution process.
    (d) Ensures the responsibilities for assessment of functional need 
and person-centered service plan development are identified.


Sec.  441.560  Service budget requirements.

    (a) For the self-directed model with a service budget, a service 
budget must be developed and approved by the State based on the 
assessment of functional need and person-centered service plan and must 
include all of the following requirements:
    (1) The specific dollar amount an individual may use for Community 
First Choice services and supports.
    (2) The procedures for informing an individual of the amount of the 
service budget before the person-centered service plan is finalized.
    (3) The procedures for how an individual may adjust the budget 
including the following:
    (i) The procedures for an individual to freely adjust amounts 
allocated to specific services and supports within the approved service 
budget.
    (ii) The circumstances, if any, that may require prior approval by 
the State before a budget adjustment is made.
    (4) The circumstances, if any, that may require a change in the 
person-centered service plan.
    (5) The procedures that govern the determination of transition 
costs and other permissible services and supports as defined at Sec.  
441.520(b).
    (6) The procedures for an individual to request a fair hearing 
under Subpart E of this title if an individual's request for a budget 
adjustment is denied or the amount of the budget is reduced.
    (b) The budget methodology set forth by the State to determine an 
individual's service budget amount must:
    (1) Be objective and evidence-based utilizing valid, reliable cost 
data.
    (2) Be applied consistently to individuals.
    (3) Be included in the State plan.
    (4) Include a calculation of the expected cost of Community First 
Choice services and supports, if those services and supports are not 
self-directed.
    (5) Have a process in place that describes the following:
    (i) Any limits the State places on Community First Choice services 
and supports, and the basis for the limits.
    (ii) Any adjustments that are allowed and the basis for the 
adjustments.
    (c) The State must have procedures in place that will provide 
safeguards to individuals when the budgeted service amount is 
insufficient to meet the individual's needs.
    (d) The State must have a method of notifying individuals of the 
amount of any limit that applies to an individual's Community First 
Choice services and supports. Notice must be communicated in an 
accessible format, communicated in plain language, and needed auxiliary 
aids and services should be provided.
    (e) The budget may not restrict access to other medically necessary 
care and services furnished under the State plan and approved by the 
State but which are not included in the budget.
    (f) The State must have a procedure to adjust a budget when a 
reassessment indicates a change in an individual's medical condition, 
functional status, or living situation.


Sec.  441.565  Provider qualifications.

    (a) For all service delivery models:
    (1) An individual retains the right to train attendant care 
providers in the specific areas of attendant care needed by the 
individual, and to have the attendant care provider perform the needed 
assistance in a manner that comports with the individual's personal, 
cultural, and/or religious preferences.
    (2) An individual retains the right to establish additional staff 
qualifications based on the individual's needs and preferences.
    (3) Individuals also have the right to access other training 
provided by or through the State so that their attendant care 
provider(s) can meet any additional qualifications required or desired 
by individuals.
    (b) For the agency-provider model, the State must define in writing 
adequate qualifications for providers in the agency model of Community 
First Choice services and supports.
    (c) For the self-directed model with service budget, an individual 
has the option to permit family members, or any other individuals, to 
provide Community First Choice services and supports identified in the 
person-centered service plan, provided they meet the qualifications to 
provide the services and supports established by the individual, 
including additional training.
    (d) For other models, the applicability of requirements at 
paragraphs (b) or (c) of this section will be determined based on the 
description and approval of the model.


Sec.  441.570  State assurances.

    A State must assure the following requirements are met:
    (a) Necessary safeguards have been taken to protect the health and 
welfare of enrollees in Community First Choice, including adherence to 
section 1903(i) of the Act that Medicaid payment shall not be made for 
items or services furnished by individuals or entities excluded from 
participating in the Medicaid Program.
    (b) For the first full 12 month period in which the State plan 
amendment is implemented, the State must maintain or exceed the level 
of State expenditures for home and community-based attendant services 
and supports provided under sections 1115, 1905(a), 1915, or otherwise 
under the Act, to individuals with disabilities or elderly

[[Page 26903]]

individuals attributable to the preceding 12 month period.
    (c) All applicable provisions of the Fair Labor Standards Act of 
1938.
    (d) All applicable provisions of Federal and State laws regarding 
the following:
    (1) Withholding and payment of Federal and State income and payroll 
taxes.
    (2) The provision of unemployment and workers compensation 
insurance.
    (3) Maintenance of general liability insurance.
    (4) Occupational health and safety.
    (5) Any other employment or tax related requirements.


Sec.  441.575  Development and Implementation Council.

    (a) States must establish a Development and Implementation Council, 
the majority of which is comprised of individuals with disabilities, 
elderly individuals, and their representatives.
    (b) States must consult and collaborate with the Council when 
developing and implementing a State plan amendment to provide Community 
First Choice services and supports.


Sec.  441.580  Data collection.

    A State must provide the following information regarding the 
provision of home and community-based attendant services and supports 
under Community First Choice for each Federal fiscal year for which the 
services and supports are provided:
    (a) The number of individuals who are estimated to receive 
Community First Choice services and supports under this State plan 
option during the Federal fiscal year.
    (b) The number of individuals who received the services and 
supports during the preceding Federal fiscal year.
    (c) The number of individuals served broken down by type of 
disability, age, gender, education level, and employment status.
    (d) The specific number of individuals who have been previously 
served under sections 1115, 1915(c) and (i) of the Act, or the personal 
care State plan option.
    (e) Data regarding how the State provides Community First Choice 
and other home and community-based services.
    (f) The cost of providing Community First Choice and other home and 
community-based services and supports.
    (g) Data regarding how the State provides individuals with 
disabilities who otherwise qualify for institutional care under the 
State plan or under a waiver the choice to receive home and community-
based services in lieu of institutional care.
    (h) Data regarding the impact of Community First Choice services 
and supports on the physical and emotional health of individuals.
    (i) Other data as determined by the Secretary.


Sec.  441.585  Quality assurance system.

    (a) States must establish and maintain a comprehensive, continuous 
quality assurance system, described in the State plan amendment, which 
includes the following:
    (1) A quality improvement strategy.
    (2) Methods to continuously monitor the health and welfare of each 
individual who receives home and community-based attendant services and 
supports, including a process for the mandatory reporting, 
investigation, and resolution of allegations of neglect, abuse, or 
exploitation in connection with the provision of such services and 
supports.
    (3) Measures individual outcomes associated with the receipt of 
home and community-based attendant services and supports as set forth 
in the person centered service plan, particularly for the health and 
welfare of individuals receiving such services and supports. These 
measures must be reported to CMS upon request.
    (4) Standards for all service delivery models for training, appeals 
for denials and reconsideration procedures for an individual's person-
centered service plan.
    (5) Other requirements as determined by the Secretary.
    (b) The State must ensure the quality assurance system will employ 
methods that maximizes individual independence and control, and 
provides information about the provisions of quality improvement and 
assurance to each individual receiving such services and supports.
    (c) The State must elicit and incorporate feedback from individuals 
and their representatives, disability organizations, providers, 
families of disabled or elderly individuals, members of the community 
and others to improve the quality of the community-based attendant 
services and supports benefit.


Sec.  441.590  Increased Federal financial participation.

    Beginning October 1, 2011, the FMAP applicable to the State will be 
increased by 6 percentage points, for the provision of Community First 
Choice services and supports, under an approved State plan amendment.

Authority

(Catalog of Federal Domestic Assistance Program No. 93.778, Medical 
Assistance Program)

    Dated: April 24, 2012.
Marilyn Tavenner,
Acting Administrator, Centers for Medicare & Medicaid Services.
    Approved: April 24, 2012.
Kathleen Sebelius,
Secretary, Department of Health and Human Services.
[FR Doc. 2012-10294 Filed 4-26-12; 4:15 pm]
BILLING CODE 4120-01-P