Over four million Americans rely on long-term Medicaid home- and community-based services (HCBS), overseen by the Centers for Medicare and Medicaid Services (CMS) within the United States Department of Health and Human Services (HHS). In January 2014, CMS published what is referred to, informally, as the “Settings Rule,” which outlined requirements for all settings providing HCBS and established other policies designed to improve access to these services. Full implementation of these requirements remains incomplete nearly a decade later, with CMS continuing to extend the effective deadline and progress towards compliance varying state by state.
Analysis
The requirements of the Settings Rule speak to HCBS being provided to several distinct populations through federal 1915(c) or 1115 waivers, including:
- Individuals with intellectual or developmental disabilities
- Individuals 65 or older, or individuals with physical disabilities
- Individuals with traumatic brain and/or spinal cord injuries
- Children who have been deemed medically fragile/are dependent on medical technology
- Individuals with mental health needs
- Individuals living with HIV/AIDS
- Individuals with autism
A thorough survey of each state’s progress towards implementation within these waiver categories since 2014 offers an overview of how much priority that state’s government has placed upon achieving compliance and providing care for individuals requiring HCBS. Further examination also illuminates challenges those states have faced during implementation and the steps they have taken, if any, to alleviate the deficiencies.
Key Findings
- In a 2023 survey of state Medicaid HCBS programs, 43 states reported that at least one HCBS waiver had fully implemented the Settings Rule. Of those states, 24 reported full implementation across all state-provided waivers, with the other 19 reporting at least one fully implemented. Only seven (7) states reported having no fully implemented waivers.
- Within this same survey, 10 states declared that compliance with the rule was the top priority for one or more of their HCBS programs, while an additional 22 states named compliance as a second priority for one or more of their programs.
- A majority of 1915(c) and 1115 waivers serving people with intellectual or developmental disabilities, seniors or people with physical disabilities, and people with traumatic brain or spinal cord injuries have components of the settings rule that they are still working to implement.
- In May 2022, to give lagging states more time for implementation, CMS introduced the option for states to request corrective action plans (CAPs). Since May 2022, 37 states have requested or been granted a CAP for at least one waiver, and deadlines for full implementation currently range from July 2023 to January 2026.
- Use of CAPs was most common for waivers serving people with intellectual or developmental disabilities and for people who are ages 65 and older or have physical disabilities.
- Among the 45 responding states with waivers for people who have intellectual or developmental disabilities, 16 states had already fully implemented the Settings Rule and 29 had CAPs. Among the 43 responding states with waivers for people who are over age 65 or have physical disabilities, 20 had fully implemented the rule and 23 had CAPs.
An Overview of the Settings Rule
For HCBS provided under sections 1915(c) and 1115, the Settings Rule requires that all settings:
- Are integrated with full access to the larger community’s resources and opportunities
- Are selected by the individual seeking care among different options
- Ensure rights to privacy, dignity, respect, and freedom from coercion and restraint
- Optimize autonomy and independence of residents and participants
- Provide people with choices of services and providers
Provider-owned or controlled settings are also required to offer:
- A lease or other legally enforceable agreement for residents
- Lockable entrances that ensure privacy within the unit
- Physical accessibility to unit
- Control of schedule within unit
- Unrestricted access to food
- Freedom to furnish a unit
- Freedom to choose roommates and host visitors at any time
Increased Accessibility to HCBS under the Settings Rule
The rule also made other changes that were designed to improve access to HCBS, such as:
- States were allowed to streamline program administration by combining multiple waivers into one
- HCBS programs are mandated to use a person-centered approach for plans of care, ensuring that participant goals and preferences guide the delivery of services
- States are allowed to provide optional HCBS through state Medicaid plans and establish new eligibility categories for people who need HCBS, per section 1915(i) of the Affordable Care Act
Timeline of the CMS Implementation Strategy for States
Although the Settings Rule was declared finalized and in effect as of March 2014, states were given one year to submit a transition plan, and until 2020 to complete implementation. After a 2017 assessment by CMS that determined several states would need more time to reach compliance even with several reforms already in process, this deadline was extended to 2022. The disruption caused by the COVID-19 pandemic compelled CMS to further extend the deadline to 2023.
CMS also introduced an option for states to request corrective action plans (CAPs) in May 2022, which provided additional time to reach compliance on certain settings criteria, such as:
- Ensuring HCBS recipients had access to the broader community
- Facilitating employment opportunities for HCBS recipients
- Offering options for private housing units, including choice of roommate
CMS encouraged states to apply for CAPs provided that their statewide transition plan had received approval and settings criteria unaffected by the pandemic were fully implemented.
Implementation Challenges Faced by State Programs
The Settings Rule requires states to ensure that all individual HCBS providers and agencies were compliant across all waivers, which has proven to be a significant obstacle towards full compliance in certain states, including Montana and Connecticut. Other states, such as New York, had suffered dramatic HCBS workforce reductions as a result of the pandemic. These states applied for CAPs that would give them more time to hire sufficient staff.
How Implementation Affects Medicaid-Covered HCBS Recipients
In states where full or partial implementation of Settings Rule criteria has already been achieved, HCBS recipients noted that having the right to seek employment, choose one’s own schedule, and maintain privacy within one’s own home improved their overall quality of life. Others have raised concerns, however, about whether the Settings Rule overgeneralizes the needs of all HCBS recipients and if the requirement to have states implement all criteria is proving impractical.
Conclusion
Although most states have made important progress towards meeting compliance with the CMS Settings Rule for HCBS, there is still a great deal of work to be done. The requirements being implemented represent a number of positive, life-changing benefits for people receiving long-term care through Medicare and Medicaid. Although reasonable accommodations have been given to states to allow for transition time–including an extension due to the COVID-19 pandemic and the option to apply for CAPs–it has now been exactly ten years since the Settings Rule was first published, and state governments should approach implementation with a renewed sense of priority.