Section 1915(c) of the Act permits States to offer, under a waiver of statutory requirements, an array of home and community-based services that an individual needs to avoid institutionalization. Those services are defined in § 440.180 of this subchapter. This subpart describes what the Medicaid agency must do to obtain a waiver.

(a) A request for a waiver under this section must consist of the following:

(1) The assurances required by § 441.302 and the supporting documentation required by § 441.303.

(2) When applicable, requests for waivers of the requirements of section 1902(a)(1), section 1902(a)(10)(B), or section 1902(a)(10)(C)(i)(III) of the Act, which concern respectively, statewide application of Medicaid, comparability of services, and income and resource rules applicable to medically needy individuals living in the community.

(3) A statement explaining whether the agency will refuse to offer home or community-based services to any beneficiary if the agency can reasonably expect that the cost of the services would exceed the cost of an equivalent level of care provided in—

(i) A hospital (as defined in § 440.10 of this chapter);

(ii) A NF (as defined in section 1919(a) of the Act); or

(iii) An ICF/IID (as defined in § 440.150 of this chapter), if applicable.

(b) If the agency furnishes home and community-based services, as defined in § 440.180 of this subchapter, under a waiver granted under this subpart, the waiver request must—

(1) Provide that the services are furnished—

(i) Under a written person-centered service plan (also called plan of care) that is based on a person-centered approach and is subject to approval by the Medicaid agency.

(ii) Only to beneficiaries who are not inpatients of a hospital, NF, or ICF/IID; and

(iii) Only to beneficiaries who the agency determines would, in the absence of these services, require the Medicaid covered level of care provided in—

(A) A hospital (as defined in § 440.10 of this chapter);

(B) A NF (as defined in section 1919(a) of the Act); or

(C) An ICF/IID (as defined in § 440.150 of this chapter);

(2) Describe the qualifications of the individual or individuals who will be responsible for developing the individual plan of care;

(3) Describe the group or groups of individuals to whom the services will be offered;

(4) Describe the services to be furnished so that each service is separately defined. Multiple services that are generally considered to be separate services may not be consolidated under a single definition. Commonly accepted terms must be used to describe the service and definitions may not be open ended in scope. CMS will, however, allow combined service definitions (bundling) when this will permit more efficient delivery of services and not compromise either a beneficiary's access to or free choice of providers.

(5) Provide that the documentation requirements regarding individual evaluation, specified in § 441.303(c), will be met; and

(6) Be limited to one or more of the following target groups or any subgroup thereof that the State may define:

(i) Aged or disabled, or both.

(ii) Individuals with Intellectual or Developmental Disabilities, or both.

(iii) Mentally ill.

(c) A waiver request under this subpart must include the following—

(1) Person-centered planning process. The individual, or if applicable, the individual and the individual's authorized representative, will lead the person-centered planning process. When the term “individual” is used throughout § 441.301(c)(1) through (3), it includes the individual's authorized representative if applicable. In addition, the person-centered planning process:

(i) Includes people chosen by the individual.

(ii) 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.

(iii) Is timely and occurs at times and locations of convenience to the individual.

(iv) Reflects cultural considerations of the individual and is conducted by providing information in plain language and in a manner that is accessible to individuals with disabilities and persons who are limited English proficient, consistent with § 435.905(b) of this chapter.

(v) Includes strategies for solving conflict or disagreement within the process, including clear conflict-of-interest guidelines for all planning participants.

(vi) Providers of HCBS for the individual, or those who have an interest in or are employed by a provider of HCBS for the individual must not provide case management or develop the person-centered service plan, except when the State demonstrates that the only willing and qualified entity to provide case management and/or develop person-centered service plans in a geographic area also provides HCBS. In these cases, the State must devise conflict of interest protections including separation of entity and provider functions within provider entities, which must be approved by CMS. Individuals must be provided with a clear and accessible alternative dispute resolution process.

(vii) Offers informed choices to the individual regarding the services and supports they receive and from whom.

(viii) Includes a method for the individual to request updates to the plan as needed.

(ix) Records the alternative home and community-based settings that were considered by the individual.

(2) 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 the State's 1915(c) HCBS waiver, the written plan must:

(i) Reflect that the setting in which the individual resides is chosen by the individual. The State must ensure that the setting chosen by the individual is integrated in, and supports full access of individuals receiving Medicaid HCBS 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 to the same degree of access as individuals not receiving Medicaid HCBS.

(ii) Reflect the individual's strengths and preferences.

(iii) Reflect clinical and support needs as identified through an assessment of functional need.

(iv) Include individually identified goals and desired outcomes.

(v) 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 are unpaid supports that are provided voluntarily to the individual in lieu of 1915(c) HCBS waiver services and supports.

(vi) Reflect risk factors and measures in place to minimize them, including individualized back-up plans and strategies when needed.

(vii) Be understandable to the individual receiving services and supports, and the individuals important in supporting him or her. At a minimum, for the written plan to be understandable, it must be written in plain language and in a manner that is accessible to individuals with disabilities and persons who are limited English proficient, consistent with § 435.905(b) of this chapter.

(viii) Identify the individual and/or entity responsible for monitoring the plan.

(ix) Be finalized and agreed to, with the informed consent of the individual in writing, and signed by all individuals and providers responsible for its implementation.

(x) Be distributed to the individual and other people involved in the plan.

(xi) Include those services, the purpose or control of which the individual elects to self-direct.

(xii) Prevent the provision of unnecessary or inappropriate services and supports.

(xiii) Document that any modification of the additional conditions, under paragraph (c)(4)(vi)(A) through (D) of this section, must be supported by a specific assessed need and justified in the person-centered service plan. The following requirements must be documented in the person-centered service plan:

(A) Identify a specific and individualized assessed need.

(B) Document the positive interventions and supports used prior to any modifications to the person-centered service plan.

(C) Document less intrusive methods of meeting the need that have been tried but did not work.

(D) Include a clear description of the condition that is directly proportionate to the specific assessed need.

(E) Include a regular collection and review of data to measure the ongoing effectiveness of the modification.

(F) Include established time limits for periodic reviews to determine if the modification is still necessary or can be terminated.

(G) Include informed consent of the individual.

(H) Include an assurance that interventions and supports will cause no harm to the individual.

(3) Review of the person-centered service plan—(i) Requirement. The State must ensure that the person-centered service plan for every individual is reviewed, and revised as appropriate, based upon the reassessment of functional need at least every 12 months, when the individual's circumstances or needs change significantly, or at the request of the individual.

(ii) Minimum performance at the State level. The State must demonstrate, through the reporting requirements at § 441.311(b)(3), that it ensures the following minimum performance levels are met:

(A) Complete a reassessment of functional need at least every 12 months for no less than 90 percent of the individuals continuously enrolled in the waiver for at least 365 days; and

(B) Review, and revise as appropriate, the person-centered service plan, based upon the reassessment of functional need, at least every 12 months, for no less than 90 percent of the individuals continuously enrolled in the waiver for at least 365 days.

(iii) Applicability date. States must comply with the performance levels described in paragraph (c)(3)(ii) of this section beginning 3 years after July 9, 2024; and in the case of the State that implements a managed care delivery system under the authority of sections 1915(a), 1915(b), 1932(a), or 1115(a) of the Act and includes HCBS in the MCO's, PIHP's, or PAHP's contract, the first rating period for contracts with the MCO, PIHP, or PAHP beginning on or after the date that is 3 years after July 9, 2024.

(4) Home and Community-Based Settings. Home and community-based settings must 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:

(i) The setting is integrated in and supports full access of individuals receiving Medicaid HCBS 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, to the same degree of access as individuals not receiving Medicaid HCBS.

(ii) The setting is selected by the individual from among setting options including non-disability specific settings and an option for a private unit in a residential setting. The setting options are identified and documented in the person-centered service plan and are based on the individual's needs, preferences, and, for residential settings, resources available for room and board.

(iii) Ensures an individual's rights of privacy, dignity and respect, and freedom from coercion and restraint.

(iv) Optimizes, but does not regiment, individual initiative, autonomy, and independence in making life choices, including but not limited to, daily activities, physical environment, and with whom to interact.

(v) Facilitates individual choice regarding services and supports, and who provides them.

(vi) In a provider-owned or controlled residential setting, in addition to the qualities at § 441.301(c)(4)(i) through (v), the following additional conditions must be met:

(A) The unit or dwelling is a specific physical place that can be owned, rented, or occupied under a 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. For settings in which landlord tenant laws do not apply, the State must ensure that a lease, residency agreement or other form of written agreement will be in place for each HCBS participant, and that the document provides protections that address eviction processes and appeals comparable to those provided under the jurisdiction's landlord tenant law.

(B) Each individual has privacy in their sleeping or living unit:

(1) Units have entrance doors lockable by the individual, with only appropriate staff having keys to doors.

(2) Individuals sharing units have a choice of roommates in that setting.

(3) Individuals have the freedom to furnish and decorate their sleeping or living units within the lease or other agreement.

(C) Individuals have the freedom and support to control their own schedules and activities, and have access to food at any time.

(D) Individuals are able to have visitors of their choosing at any time.

(E) The setting is physically accessible to the individual.

(F) Any modification of the additional conditions, under § 441.301(c)(4)(vi)(A) through (D), must be supported by a specific assessed need and justified in the person-centered service plan. The following requirements must be documented in the person-centered service plan:

(1) Identify a specific and individualized assessed need.

(2) Document the positive interventions and supports used prior to any modifications to the person-centered service plan.

(3) Document less intrusive methods of meeting the need that have been tried but did not work.

(4) Include a clear description of the condition that is directly proportionate to the specific assessed need.

(5) Include regular collection and review of data to measure the ongoing effectiveness of the modification.

(6) Include established time limits for periodic reviews to determine if the modification is still necessary or can be terminated.

(7) Include the informed consent of the individual.

(8) Include an assurance that interventions and supports will cause no harm to the individual.

(5) Settings that are not Home and Community-Based. Home and community-based settings do not include the following:

(i) A nursing facility;

(ii) An institution for mental diseases;

(iii) An intermediate care facility for individuals with intellectual disabilities;

(iv) A hospital; or

(v) Any other locations that have qualities of an institutional setting, as determined by the Secretary. Any setting that is located in a building that is also a publicly or privately operated facility that provides inpatient institutional treatment, or in a building on the grounds of, or immediately adjacent to, a public institution, or any other setting that has the effect of isolating individuals receiving Medicaid HCBS from the broader community of individuals not receiving Medicaid HCBS will be presumed to be a setting that has the qualities of an institution unless the Secretary determines through heightened scrutiny, based on information presented by the State or other parties, that the setting does not have the qualities of an institution and that the setting does have the qualities of home and community-based settings.

(6) Home and Community-Based Settings: Compliance and Transition:

(i) States submitting new and initial waiver requests must provide assurances of compliance with the requirements of this section for home and community-based settings as of the effective date of the waiver.

(ii) CMS will require transition plans for existing section 1915(c) waivers and approved state plans providing home and community-based services under section 1915(i) to achieve compliance with this section, as follows:

(A) For each approved section 1915(c) HCBS waiver subject to renewal or submitted for amendment within one year after the effective date of this regulation, the State must submit a transition plan at the time of the waiver renewal or amendment request that sets forth the actions the State will take to bring the specific waiver into compliance with this section. The waiver approval will be contingent on the inclusion of the transition plan approved by CMS. The transition plan must include all elements required by the Secretary; and within one hundred and twenty days of the submission of the first waiver renewal or amendment request the State must submit a transition plan detailing how the State will operate all section 1915(c) HCBS waivers and any section 1915(i) State plan benefit in accordance with this section. The transition plan must include all elements including timelines and deliverables as approved by the Secretary.

(B) For States that do not have a section 1915(c) HCBS waiver or a section 1915(i) State plan benefit due for renewal or proposed for amendments within one year of the effective date of this regulation, the State must submit a transition plan detailing how the State will operate all section 1915(c) HCBS waivers and any section 1915(i) State plan benefit in accordance with this section. This plan must be submitted no later than one year after the effective date of this regulation. The transition plan must include all elements including timelines and deliverables as approved by the Secretary.

(iii) A State must provide at least a 30-day public notice and comment period regarding the transition plan(s) that the State intends to submit to CMS for review and consideration, as follows:

(A) The State must at a minimum provide two (2) statements of public notice and public input procedures.

(B) The State must ensure the full transition plan(s) is available to the public for public comment.

(C) The State must consider and modify the transition plan, as the State deems appropriate, to account for public comment.

(iv) A State must submit to CMS, with the proposed transition plan:

(A) Evidence of the public notice required.

(B) A summary of the comments received during the public notice period, reasons why comments were not adopted, and any modifications to the transition plan based upon those comments.

(v) Upon approval by CMS, the State will begin implementation of the transition plans. The State's failure to submit an approvable transition plan as required by this section and/or to comply with the terms of the approved transition plan may result in compliance actions, including but not limited to deferral/disallowance of Federal Financial Participation.

(7) Grievance system—(i) Purpose. The State must establish a procedure under which a beneficiary may file a grievance related to the State's or a provider's performance of the activities described in paragraphs (c)(1) through (6) of this section. This requirement does not apply to a managed care delivery system under the authority of sections 1915(a), 1915(b), 1932(a), or 1115(a) of the Act. The State may have activities described in paragraph (c)(7) of this section performed by contractors or other government entities, provided, however, that the State retains responsibility for ensuring performance of and compliance with these provisions.

(ii) Definitions. As used in this section:

Grievance means an expression of dissatisfaction or complaint related to the State's or a provider's performance of the activities described in paragraphs (c)(1) through (6) of this section, regardless of whether remedial action is requested.

Grievance system means the processes the State implements to handle grievances, as well as the processes to collect and track information about them.

(iii) General requirements. (A) The beneficiary or a beneficiary's authorized representative, if applicable, may file a grievance. All references to beneficiary include the role of the beneficiary's representative, if applicable.

(1) Another individual or entity may file a grievance on behalf of the beneficiary, or provide the beneficiary with assistance or representation throughout the grievance process, with the written consent of the beneficiary or authorized representative.

(2) A provider cannot file a grievance that would violate the State's conflict of interest guidelines, as required in § 441.540(a)(5).

(B) The State must:

(1) Base its grievance processes on written policies and procedures that, at a minimum, meet the conditions set forth in this paragraph (c)(7);

(2) Provide beneficiaries reasonable assistance in ensuring grievances are appropriately filed with the grievance system, completing forms and taking other procedural steps related to a grievance. This includes, but is not limited to, ensuring the grievance system is accessible to individuals with disabilities and providing meaningful access to individuals with Limited English Proficiency, consistent with § 435.905(b) of this chapter, and includes auxiliary aids and services where necessary to ensure effective communication, such as providing interpreter services and toll-free numbers that have adequate TTY/TTD and interpreter capability;

(3) Ensure that punitive or retaliatory action is neither threatened nor taken against an individual filing a grievance or who has had a grievance filed on their behalf;

(4) Accept grievances and requests for extension of timeframes from the beneficiary;

(5) Provide to the beneficiary the notices and information required under this subsection, including information on their rights under the grievance system and on how to file grievances, and ensure that such information is accessible for individuals with disabilities and individuals with Limited English Proficiency in accordance with § 435.905(b);

(6) Review any grievance resolution with which the beneficiary is dissatisfied; and

(7) Provide information about the grievance system to all providers and subcontractors approved to deliver services.

(C) The process for handling grievances must:

(1) Allow the beneficiary to file a grievance with the State either orally or in writing;

(2) Acknowledge receipt of each grievance;

(3) Ensure that the individuals who make decisions on grievances are individuals:

(i) Who were neither involved in any previous level of review or decision-making related to the grievance nor a subordinate of any such individual;

(ii) Who are individuals who have the appropriate clinical and non-clinical expertise, as determined by the State; and

(iii) Who consider all comments, documents, records, and other information submitted by the beneficiary without regard to whether such information was submitted to or considered previously by the State;

(4) Provide the beneficiary a reasonable opportunity, face-to-face (including through the use of audio or video technology) and in writing, to present evidence and testimony and make legal and factual arguments related to their grievance. The State must inform the beneficiary of the limited time available for this sufficiently in advance of the resolution timeframe for grievances as specified in paragraph (c)(7)(v) of this section;

(5) Provide the beneficiary their case file, including medical records in compliance with the HIPAA Privacy Rule (45 CFR part 160 and part 164 subparts A and E), other documents and records, and any new or additional evidence considered, relied upon, or generated by the State related to the grievance. This information must be provided free of charge and sufficiently in advance of the resolution timeframe for grievances as specified in paragraph (c)(7)(v) of this section; and

(6) Provide beneficiaries, free of charge, with language services, including written translation and interpreter services in accordance with § 435.905(b), to support their participation in grievance processes and their use of the grievance system.

(iv) Filing timeframes. A beneficiary may file a grievance at any time.

(v) Resolution and notification—(A) Basic rule. The State must resolve each grievance, and provide notice, as expeditiously as the beneficiary's health condition requires, within State-established timeframes that may not exceed the timeframes specified in this section.

(B) Resolution timeframes. For resolution of a grievance and notice to the affected parties, the timeframe may not exceed 90 calendar days from the day the State receives the grievance. This timeframe may be extended under paragraph (c)(7)(v)(C) of this section.

(C) Extension of timeframes. The States may extend the timeframe from that in paragraph (c)(7)(v)(B) of this section by up to 14 calendar days if -

(1) The beneficiary requests the extension; or

(2) The State documents that there is need for additional information and how the delay is in the beneficiary's interest.

(D) Requirements following extension. If the State extends the timeframe not at the request of the beneficiary, it must complete all of the following:

(1) Make reasonable efforts to give the beneficiary prompt oral notice of the delay;

(2) Within 2 calendar days of determining a need for a delay, but no later than the timeframes in paragraph (c)(7)(v)(B) of this section, give the beneficiary written notice of the reason for the decision to extend the timeframe; and

(3) Resolve the grievance as expeditiously as the beneficiary's health condition requires and no later than the date the extension expires.

(vi) Format of notice. The State must establish a method to notify a beneficiary of the resolution of a grievance and ensure that such methods meet, at a minimum, the standards described at § 435.905(b) of this chapter.

(vii) Recordkeeping. (A) The State must maintain records of grievances and must review the information as part of its ongoing monitoring procedures.

(B) The record of each grievance must contain, at a minimum, all of the following information:

(1) A general description of the reason for the grievance;

(2) The date received;

(3) The date of each review or, if applicable, review meeting;

(4) Resolution of the grievance, as applicable;

(5) Date of resolution, if applicable; and

(6) Name of the beneficiary for whom the grievance was filed.

(C) The record must be accurately maintained in a manner available upon request to CMS.

(viii) Applicability date. States must comply with the requirement at paragraph (c)(7) of this section beginning 2 years after July 9, 2024.

Unless the Medicaid agency provides the following satisfactory assurances to CMS, CMS will not grant a waiver under this subpart and may terminate a waiver already granted:

(a) Health and Welfare—Assurance that necessary safeguards have been taken to protect the health and welfare of the beneficiaries of the services. Those safeguards must include—

(1) Adequate standards for all types of providers that provide services under the waiver;

(2) Assurance that the standards of any State licensure or certification requirements are met for services or for individuals furnishing services that are provided under the waiver; and

(3) Assurance that all facilities covered by section 1616(e) of the Act, in which home and community-based services will be provided, are in compliance with applicable State standards that meet the requirements of 45 CFR part 1397 for board and care facilities.

(4) Assurance that the State is able to meet the unique service needs of the individuals when the State elects to serve more than one target group under a single waiver, as specified in § 441.301(b)(6).

(i) On an annual basis the State will include in the quality section of the CMS-372 form (or any successor form designated by CMS) data that indicates the State continues to serve multiple target groups in the single waiver and that a single target group is not being prioritized to the detriment of other groups.

(ii) [Reserved]

(5) Assurance that services are provided in home and community based settings, as specified in § 441.301(c)(4).

(6) Assurance that the State operates and maintains an incident management system that identifies, reports, triages, investigates, resolves, tracks, and trends critical incidents.

(i) Requirements. The State must:

(A) Define critical incident to include, at a minimum—

(1) Verbal, physical, sexual, psychological, or emotional abuse;

(2) Neglect;

(3) Exploitation including financial exploitation;

(4) Misuse or unauthorized use of restrictive interventions or seclusion;

(5) A medication error resulting in a telephone call to, or a consultation with, a poison control center, an emergency department visit, an urgent care visit, a hospitalization, or death; or

(6) An unexplained or unanticipated death, including but not limited to a death caused by abuse or neglect;

(B) Use an information system, as defined in 45 CFR 164.304 and compliant with 45 CFR part 164, that, at a minimum, enables—

(1) Electronic critical incident data collection;

(2) Tracking (including of the status and resolution of investigations); and

(3) Trending;

(C) Require providers to report to the State, within State-established timeframes and procedures, any critical incident that occurs during the delivery of services authorized under section 1915(c) of the Act and as specified in the beneficiary's person-centered service plan, or occurs as a result of the failure to deliver services authorized under section 1915(c) of the Act and as specified in the beneficiary's person-centered service plan;

(D) Use claims data, Medicaid fraud control unit data, and data from other State agencies, such as Adult Protective Services or Child Protective Services, to the extent permissible under applicable State law to identify critical incidents that are unreported by providers and occur during the delivery of services authorized under section 1915(c) of the Act and as specified in the beneficiary's person-centered service plan, or occur as a result of the failure to deliver services authorized under section 1915(c) of the Act and as specified in the beneficiary's person-centered service plan;

(E) Ensure that there is information sharing on the status and resolution of investigations, such as through the use of information sharing agreements, between the State and the entity or entities responsible in the State for investigating critical incidents as defined in paragraph (a)(6)(i)(A) of this section if the State refers critical incidents to other entities for investigation;

(F) Separately investigate critical incidents if the investigative agency fails to report the resolution of an investigation within State-specified timeframes; and

(G) Demonstrate that it meets the requirements in paragraph (a)(6) of this section through the reporting requirement at § 441.311(b)(1).

(ii) Minimum performance at the State level. The State must demonstrate, through the reporting requirements at § 441.311(b)(2), that it meets the following minimum performance levels:

(A) Initiate an investigation, within State-specified timeframes, for no less than 90 percent of critical incidents;

(B) Complete an investigation and determine the resolution of the investigation, within State-specified timeframes, for no less than 90 percent of critical incidents; and

(C) Ensure that corrective action has been completed within State-specified timeframes, for no less than 90 percent of critical incidents that require corrective action.

(iii) Applicability date. States must comply with the requirements in paragraph (a)(6) of this section beginning 3 years after July 9, 2024; except for the requirement at paragraph (a)(6)(i)(B) of this section, with which the State must comply beginning 5 years after July 9, 2024; and in the case of the State that implements a managed care delivery system under the authority of sections 1915(a), 1915(b), 1932(a), or 1115(a) of the Act and includes HCBS in the MCO's, PIHP's, or PAHP's contract, the first rating period for contracts with the MCO, PIHP, or PAHP beginning on or after 3 years after July 9, 2024, except for the requirement at paragraph (a)(6)(i)(B) of this section, with which the first rating period for contracts with the MCO, PIHP or PAHP beginning on or after 5 years after July 9, 2024.

(b) Financial accountability— The agency will assure financial accountability for funds expended for home and community-based services, provide for an independent audit of its waiver program (except as CMS may otherwise specify for particular waivers), and it will maintain and make available to HHS, the Comptroller General, or other designees, appropriate financial records documenting the cost of services provided under the waiver, including reports of any independent audits conducted.

(c) Evaluation of need. Assurance that the agency will provide for the following:

(1) Initial evaluation. An evaluation of the need for the level of care provided in a hospital, a NF, or an ICF/IID when there is a reasonable indication that a beneficiary might need the services in the near future (that is, a month or less) unless he or she receives home or community-based services. For purposes of this section, “evaluation” means a review of an individual beneficiary's condition to determine—

(i) If the beneficiary requires the level of care provided in a hospital as defined in § 440.10 of this subchapter, a NF as defined in section 1919(a) of the Act, or an ICF/IID as defined by § 440.150 of this subchapter; and

(ii) That the beneficiary, but for the provision of waiver services, would otherwise be institutionalized in such a facility.

(2) Periodic reevaluations. Reevaluations, at least annually, of each beneficiary receiving home or community-based services to determine if the beneficiary continues to need the level of care provided and would, but for the provision of waiver services, otherwise be institutionalized in one of the following institutions:

(i) A hospital;

(ii) A NF; or

(iii) An ICF/IID.

(d) Alternatives—Assurance that when a beneficiary is determined to be likely to require the level of care provided in a hospital, NF, or ICF/IID, the beneficiary or his or her legal representative will be—

(1) Informed of any feasible alternatives available under the waiver; and

(2) Given the choice of either institutional or home and community-based services.

(e) Average per capita expenditures. Assurance that the average per capita fiscal year expenditures under the waiver will not exceed 100 percent of the average per capita expenditures that would have been made in the fiscal year for the level of care provided in a hospital, NF, or ICF/IID under the State plan had the waiver not been granted.

(1) These expenditures must be reasonably estimated and documented by the agency.

(2) The estimate must be on an annual basis and must cover each year of the waiver period.

(f) Actual total expenditures. Assurance that the agency's actual total expenditures for home and community-based and other Medicaid services under the waiver and its claim for FFP in expenditures for the services provided to beneficiaries under the waiver will not, in any year of the waiver period, exceed 100 percent of the amount that would be incurred by the State's Medicaid program for these individuals, absent the waiver, in—

(1) A hospital;

(2) A NF; or

(3) An ICF/IID.

(g) Institutionalization absent waiver. Assurance that, absent the waiver, beneficiaries in the waiver would receive the appropriate type of Medicaid-funded institutional care (hospital, NF, or ICF/IID) that they require.

(h) Reporting. Assurance that the agency will provide CMS with information on the waiver's impact, including the data and information as required in § 441.311.

(i) Habilitation services. Assurance that prevocational, educational, or supported employment services, or a combination of these services, if provided as habilitation services under the waiver, are—

(1) Not otherwise available to the individual through a local educational agency under section 602 (16) and (17) of the Education of the Handicapped Act (20 U.S.C. 1401 (16 and 17)) or as services under section 110 of the Rehabilitation Act of 1973 (29 U.S.C. 730); and

(2) Furnished as part of expanded habilitation services, if the State has requested and received CMS's approval under a waiver or an amendment to a waiver.

(j) Day treatment or partial hospitalization, psychosocial rehabilitation services, and clinic services for individuals with chronic mental illness. Assurance that FFP will not be claimed in expenditures for waiver services including, but not limited to, day treatment or partial hospitalization, psychosocial rehabilitation services, and clinic services provided as home and community-based services to individuals with chronic mental illnesses if these individuals, in the absence of a waiver, would be placed in an IMD and are—

(1) Age 22 to 64;

(2) Age 65 and older and the State has not included the optional Medicaid benefit cited in § 440.140; or

(3) Age 21 and under and the State has not included the optional Medicaid benefit cited in § 440.160.

(k) HCBS payment adequacy. Assurance that payment rates are adequate to ensure a sufficient direct care workforce to meet the needs of beneficiaries and provide access to services in the amount, duration, and scope specified in beneficiaries' person-centered service plans.

(1) Definitions. As used in this paragraph—

(i) Compensation means:

(A) Salary, wages, and other remuneration as defined by the Fair Labor Standards Act and implementing regulations (29 U.S.C. 201 et seq., 29 CFR parts 531 and 778);

(B) Benefits (such as health and dental benefits, life and disability insurance, paid leave, retirement, and tuition reimbursement); and

(C) The employer share of payroll taxes for direct care workers delivering services authorized under section 1915(c) of the Act.

(ii) Direct care worker means any of the following individuals who may be employed by a Medicaid provider, State agency, or third party; contracted with a Medicaid provider, State agency, or third party; or delivering services under a self-directed services delivery model:

(A) A registered nurse, licensed practical nurse, nurse practitioner, or clinical nurse specialist who provides nursing services to Medicaid beneficiaries receiving home and community-based services available under this subpart;

(B) A licensed or certified nursing assistant who provides such services under the supervision of a registered nurse, licensed practical nurse, nurse practitioner, or clinical nurse specialist;

(C) A direct support professional;

(D) A personal care attendant;

(E) A home health aide; or

(F) Other individuals who are paid to provide services to address activities of daily living or instrumental activities of daily living, behavioral supports, employment supports, or other services to promote community integration directly to Medicaid beneficiaries receiving home and community-based services available under this subpart, including nurses and other staff providing clinical supervision.

(iii) Excluded costs means costs that are not included in the calculation of the percentage of Medicaid payments to providers that is spent on compensation for direct care workers. Such costs are limited to:

(A) Costs of required trainings for direct care workers (such as costs for qualified trainers and training materials);

(B) Travel costs for direct care workers (such as mileage reimbursement or public transportation subsidies); and

(C) Costs of personal protective equipment for direct care workers.

(2) Requirement. (i) Except as provided in paragraph (k)(2)(ii) of this section, the State must demonstrate annually, through the reporting requirements at paragraph (k)(6) of this section and § 441.311(e), that it meets the minimum performance levels in paragraph (k)(3) of this section for furnishing homemaker, home health aide, or personal care services, as set forth at § 440.180(b)(2) through (4), that are delivered by direct care workers and authorized under section 1915(c) of the Act.

(ii) Treatment of certain payment data under self-directed services delivery models. If the State provides that homemaker, home health aide, or personal care services, as set forth at § 440.180(b)(2) through (4), may be furnished under a self-directed services delivery model in which the beneficiary directing the services sets the direct care worker's payment rate, then the State does not include such payment data in its calculation of the State's compliance with the minimum performance levels at paragraph (k)(3) of this section.

(3) Minimum performance at the provider level. Except as provided in paragraphs (k)(5) and (7) of this section, the State must meet the following minimum performance level as applicable, calculated as the percentage of total payment (not including excluded costs) to a provider for furnishing homemaker, home health aide, or personal care services, as set forth at § 440.180(b)(2) through (4), represented by the provider's total compensation to direct care workers:

(i) Except as provided in paragraph (k)(3)(ii) of this section, the State must ensure that each provider spends 80 percent of total payments the provider receives for services it furnishes as described in paragraph (k)(3) of this section on total compensation for direct care workers who furnish those services.

(ii) At the State's option, for providers determined by the State to meet its State-defined small provider criteria in paragraph (k)(4)(i) of this section, the State must ensure that each provider spends the percentage set by the State in accordance with paragraph (k)(4)(ii) of this section of total payments the provider receives for services it furnishes as described in paragraph (k)(3) of this section on total compensation for direct care workers who furnish those services.

(4) Small provider minimum performance level—(i) Small provider criteria. The State may develop reasonable, objective criteria through a transparent process to identify small providers that the State would require to meet the minimum performance requirement at paragraph (k)(3)(ii) of this section. The transparent process for developing criteria to identify providers that qualify for the minimum performance requirement in paragraph (k)(3)(ii) of this section must include public notice and opportunities for comment from interested parties.

(ii) Small provider minimum performance level. The State must set the percentage for a small provider to meet the minimum performance level at paragraph (k)(3)(ii) of this section based on reasonable, objective criteria it develops through a transparent process that includes public notice and opportunities for comment from interested parties.

(5) Hardship exemption. The State may develop reasonable, objective criteria through a transparent process to exempt from the minimum performance requirement at paragraph (k)(3) of this section a reasonable number of providers determined by the State to be facing extraordinary circumstances that prevent their compliance with paragraph (k)(3) of this section. The State must develop these criteria through a transparent process that includes public notice and opportunities for comment from interested parties. If a provider meets the State's hardship exemption criteria, then the State does not include that provider in its calculation of the State's compliance with the minimum performance level at paragraph (k)(3) of this section.

(6) Reporting on small provider minimum performance level and hardship exemption.

(i) States that establish a small provider minimum performance level under paragraph (k)(4) of this section must report to CMS annually the following information, in the form and manner, and at a time, specified by CMS:

(A) The State's small provider criteria developed in accordance with paragraph (k)(4)(i) of this section;

(B) The State's small provider minimum performance level developed in accordance with paragraph (k)(4)(ii) of this section;

(C) The percentage of providers of services set forth at § 440.180(b)(2) through (4) that qualify for the small provider minimum performance level at paragraph (k)(4) of this section; and

(D) A plan, subject to CMS review and approval, for small providers to meet the minimum performance requirement at paragraph (k)(3)(i) of this section within a reasonable period of time.

(ii) States that provide a hardship exemption in accordance with paragraph (k)(5) of this section must report to CMS annually the following information, in the form and manner, and at a time, specified by CMS:

(A) The State's hardship criteria developed in accordance with paragraph (k)(5) of this section;

(B) The percentage of providers of services set forth at § 440.180(b)(2) through (4) that qualify for a hardship exemption as provided in paragraph (k)(5) of this section; and

(C) A plan, subject to CMS review and approval, for reducing the number of providers that qualify for a hardship exemption within a reasonable period of time.

(iii) CMS may waive the reporting requirements in paragraphs (k)(6)(i)(D) or (k)(6)(ii)(C) of this section, as applicable, if the State demonstrates it has applied the small provider minimum performance level at paragraph (k)(4)(ii) of this section or the hardship exemption at paragraph (k)(5) of this section to less than 10 percent of the State's providers.

(7) Exemption for the Indian Health Service and Tribal health programs subject to 25 U.S.C. 1641. The Indian Health Service and Tribal health programs subject to the requirements at 25 U.S.C. 1641 are exempt from the requirements at paragraph (k) of this section.

(8) Applicability date. States must comply with the requirements set forth in paragraph (k) of this section beginning 6 years after July 9, 2024; and in the case of the State that implements a managed care delivery system under the authority of section 1915(a), 1915(b), 1932(a), or 1115(a) of the Act and includes homemaker, home health aide, or personal care services, as set forth at § 440.180(b)(2) through (4) in the MCO's, PIHP's, or PAHP's contract, the first rating period for contracts with the MCO, PIHP, or PAHP beginning on or after the date that is 6 years after July 9, 2024.

The agency must furnish CMS with sufficient information to support the assurances required by § 441.302. Except as CMS may otherwise specify for particular waivers, the information must consist of the following:

(a) A description of the safeguards necessary to protect the health and welfare of beneficiaries. This information must include a copy of the standards established by the State for facilities that are covered by section 1616(e) of the Act.

(b) A description of the records and information that will be maintained to support financial accountability.

(c) A description of the agency's plan for the evaluation and reevaluation of beneficiaries, including—

(1) A description of who will make these evaluations and how they will be made;

(2) A copy of the evaluation form to be used; and if it differs from the form used in placing beneficiaries in hospitals, NFs, or ICFs/IID, a description of how and why it differs and an assurance that the outcome of the new evaluation form is reliable, valid, and fully comparable to the form used for hospital, NF, or ICF/IID placement;

(3) The agency's procedure to ensure the maintenance of written documentation on all evaluations and reevaluations; and

(4) The agency's procedure to ensure reevaluations of need at regular intervals.

(d) A description of the agency's plan for informing eligible beneficiaries of the feasible alternatives available under the waiver and allowing beneficiaries to choose either institutional services or home and community-based services.

(e) An explanation of how the agency will apply the applicable provisions regarding the post-eligibility treatment of income and resources of those individuals receiving home and community-based services who are eligible under a special income level (included in § 435.217 of this chapter).

(f) An explanation with supporting documentation satisfactory to CMS of how the agency estimated the average per capita expenditures for services.

(1) The annual average per capita expenditure estimate of the cost of home and community-based and other Medicaid services under the waiver must not exceed the estimated annual average per capita expenditures of the cost of services in the absence of a waiver. The estimates are to be based on the following equation:

(2) For purposes of the equation, the prime factors include the average per capita cost for all State plan services and expanded EPSDT services provided that are not accounted for in other formula values.

(3) In making estimates of average per capita expenditures for a waiver that applies only to individuals with a particular illness (for example, acquired immune deficiency syndrome) or condition (for example, chronic mental illness) who are inpatients in or who would require the level of care provided in hospitals as defined by § 440.10, NFs as defined in section 1919(a) of the Act, or ICFs/IID, the agency may determine the average per capita expenditures for these individuals absent the waiver without including expenditures for other individuals in the affected hospitals, NFs, or ICFs/IID.

(4) In making estimates of average per capita expenditures for a separate waiver program that applies only to individuals identified through the preadmission screening annual resident review (PASARR) process who are developmentally disabled, inpatients of a NF, and require the level of care provided in an ICF/IID as determined by the State on the basis of an evaluation under § 441.303(c), the agency may determine the average per capita expenditures that would have been made in a fiscal year for those individuals based on the average per capita expenditures for inpatients in an ICF/IID. When submitting estimates of institutional costs without the waiver, the agency may use the average per capita costs of ICF/IID care even though the deinstitutionalized developmentally disabled were inpatients of NFs.

(5) For persons diverted rather than deinstitutionalized, the State's evaluation process required by § 441.303(c) must provide for a more detailed description of their evaluation and screening procedures for beneficiaries to ensure that waiver services will be limited to persons who would otherwise receive the level of care provided in a hospital, NF, or ICF/IID, as applicable.

(6) The State must indicate the number of unduplicated beneficiaries to which it intends to provide waiver services in each year of its program. This number will constitute a limit on the size of the waiver program unless the State requests and the Secretary approves a greater number of waiver participants in a waiver amendment. If the State has a limit on the size of the waiver program and maintains a list of individuals who are waiting to enroll in the waiver program, the State must meet the reporting requirements at § 441.311(d)(1).

(7) In determining the average per capita expenditures that would have been made in a waiver year, for waiver estimates that apply to persons with Intellectual Disability or related conditions, the agency may include costs of Medicaid residents in ICFs/IID that have been terminated on or after November 5, 1990.

(8) In submitting estimates for waivers that include personal caregivers as a waiver service, the agency may include a portion of the rent and food attributed to the unrelated personal caregiver who resides in the home or residence of the beneficiary covered under the waiver. The agency must submit to CMS for review and approval the method it uses to apportion the costs of rent and food. The method must be explained fully to CMS. A personal caregiver provides a waiver service to meet the beneficiary's physical, social, or emotional needs (as opposed to services not directly related to the care of the beneficiary; that is, housekeeping or chore services). FFP for live-in caregivers is not available if the beneficiary lives in the caregiver's home or in a residence that is owned or leased by the caregiver.

(9) In submitting estimates for waivers that apply to individuals with Intellectual Disability or a related condition, the agency may adjust its estimate of average per capita expenditures to include increases in expenditures for ICF/IID care resulting from implementation of a PASARR program for making determinations for individuals with Intellectual Disability or related conditions on or after January 1, 1989.

(10) For a State that has CMS approval to bundle waiver services, the State must continue to compute separately the costs and utilization of the component services that make up the bundled service to support the final cost and utilization of the bundled service that will be used in the cost-neutrality formula.

(g) The State, at its option, may provide for an independent assessment of its waiver that evaluates the quality of care provided, access to care, and cost-neutrality. The results of the assessment should be submitted to CMS at least 90 days prior to the expiration date of the approved waiver-period and cover the first 24 or 48 months of the waiver. If a State chooses to provide for an independent assessment, FFP is available for the costs attributable to the independent assessment.

(h) For States offering habilitation services that include prevocational, educational, or supported employment services, or a combination of these services, consistent with the provisions of § 440.180(c) of this chapter, an explanation of why these services are not available as special education and related services under sections 602 (16) and (17) of the Education of the Handicapped Act (20 U.S.C. 1401 (16 and 17)) or as services under section 110 of the Rehabilitation Act of 1973 (29 U.S.C. section 730);

(i) For States offering home and community-based services for individuals diagnosed as chronically mentally ill, an explanation of why these individuals would not be placed in an institution for mental diseases (IMD) absent the waiver, and the age group of these individuals.

(a) The effective date for a new waiver of Medicaid requirements to provide home and community-based services approved under this subpart is established by CMS prospectively on or after the date of approval and after consultation with the State agency. The initial approved waiver continues for a 3-year period from the effective date. If the agency requests it, the waiver may be extended for additional periods unless—

(1) CMS's review of the prior waiver period shows that the assurances required by § 441.302 were not met; and

(2) CMS is not satisfied with the assurances and documentation provided by the State in regard to the extension period.

(b) CMS will determine whether a request for extension of an existing waiver is actually an extension request or a request for a new waiver. If a State submits an extension request that would add a new group to the existing group of beneficiaries covered under the waiver (as defined under § 441.301(b)(6)), CMS will consider it to be two requests: One as an extension request for the existing group, and the other as a new waiver request for the new group. Waivers may be extended for additional 5-year periods.

(c) CMS may grant a State an extension of its existing waiver for up to 90 days to permit the State to document more fully the satisfaction of statutory and regulatory requirements needed to approve a new waiver request. CMS will consider this option when it requests additional information on a new waiver request submitted by a State to extend its existing waiver or when CMS disapproves a State's request for extension.

(d) The agency may request that waiver modifications be made effective retroactive to the first day of a waiver year, or another date after the first day of a waiver year, in which the amendment is submitted, unless the amendment involves substantive changes as determined by CMS.

(1) Substantive changes include, but are not limited to, revisions to services available under the waiver including elimination or reduction of services, or reduction in the scope, amount, and duration of any service, a change in the qualifications of service providers, changes in rate methodology or a constriction in the eligible population.

(2) A request for an amendment that involves a substantive change as determined by CMS, may only take effect on or after the date when the amendment is approved by CMS, and must be accompanied by information on how the State has assured smooth transitions and minimal effect on individuals adversely impacted by the change.

(e) The agency must provide public notice of any significant proposed change in its methods and standards for setting payment rates for services in accordance with § 447.205 of this chapter.

(f) The agency must establish and use a public input process, for any changes in the services or operations of the waiver.

(1) This process must be described fully in the State's waiver application and be sufficient in light of the scope of the changes proposed, to ensure meaningful opportunities for input for individuals served, or eligible to be served, in the waiver.

(2) This process must be completed at a minimum of 30 days prior to implementation of the proposed change or submission of the proposed change to CMS, whichever comes first.

(3) This process must be used for both existing waivers that have substantive changes proposed, either through the renewal or the amendment process, and new waivers.

(4) This process must include consultation with Federally-recognized Tribes, and in accordance with section 5006(e) of the American Recovery and Reinvestment Act of 2009 (Pub. L. 111-5), Indian health programs and Urban Indian Organizations.

(g)(1) If CMS finds that the Medicaid agency is not meeting one or more of the requirements for a waiver contained in this subpart, the agency is given a notice of CMS' findings and an opportunity for a hearing to rebut the findings.

(2) If CMS determines that the agency is substantively out of compliance with this subpart after the notice and any hearing, CMS may employ strategies to ensure compliance as described in paragraph (g)(3) of this section or terminate the waiver.

(3)(i) Strategies to ensure compliance may include the imposition of a moratorium on waiver enrollments, other corrective strategies as appropriate to ensure the health and welfare of waiver participants, or the withholding of a portion of Federal payment for waiver services until such time that compliance is achieved, or other actions as determined by the Secretary as necessary to address non-compliance with 1915(c) of the Act, or termination. When a waiver is terminated, the State must comport with § 441.307.

(ii) CMS will provide states with a written notice of the impending strategies to ensure compliance for a waiver program. The notice of CMS' intent to utilize strategies to ensure compliance would include the nature of the noncompliance, the strategy to be employed, the effective date of the compliance strategy, the criteria for removing the compliance strategy and the opportunity for a hearing.

(a) Regular waivers. A State's estimate of the number of individuals who may receive home and community-based services must include those who will replace beneficiaries who leave the program for any reason. A State may replace beneficiaries who leave the program due to death or loss of eligibility under the State plan without regard to any federally-imposed limit on utilization, but must maintain a record of beneficiaries replaced on this basis.

(b) Model waivers. (1) The number of individuals who may receive home and community-based services under a model waiver may not exceed 200 beneficiaries at any one time.

(2) The agency may replace any individuals who die or become ineligible for State plan services to maintain a count up to the number specified by the State and approved by CMS within the 200-maximum limit.

Whenever appropriate, the State agency administering the plan under Medicaid may enter into cooperative arrangements with the State agency responsible for administering a program for children with special health care needs under the Maternal and Child Health program (Title V of the Act) in order to ensure improved access to coordinated services to meet the children's needs.

(a) If a State chooses to terminate its waiver before the initial 3-year period or 5-year renewal period expires, it must notify CMS in writing 30 days before terminating services to beneficiaries.

(b) If CMS or the State terminates the waiver, the State must notify beneficiaries of services under the waiver in accordance with § 431.210 of this subchapter and notify them 30 days before terminating services.

The procedures specified in subpart D of part 430 of this chapter are applicable to State requests for hearings on terminations.

(a) FFP for home and community-based services listed in § 440.180 of this chapter is not available in expenditures for the following:

(1) Services provided in a facility subject to the health and welfare requirements described in § 441.302(a) during any period in which the facility is found not to be in compliance with the applicable State standards described in that section.

(2) The cost of room and board except when provided as—

(i) Part of respite care services in a facility approved by the State that is not a private residence; or

(ii) For waivers that allow personal caregivers as providers of approved waiver services, a portion of the rent and food that may be reasonably attributed to the unrelated caregiver who resides in the same household with the waiver beneficiary. FFP for a live-in caregiver is not available if the beneficiary lives in the caregiver's home or in a residence that is owned or leased by the provider of Medicaid services (the caregiver). For purposes of this provision, “board” means 3 meals a day or any other full nutritional regimen and does not include meals provided as part of a program of adult day health services as long as the meals provided do not constitute a “full” nutritional regimen.

(3) Prevocational, educational, or supported employment services, or any combination of these services, as part of habilitation services that are—

(i) Provided in approved waivers that include a definition of “habilitation services” but which have not included prevocational, educational, and supported employment services in that definition; or

(ii) Otherwise available to the beneficiary under either special education and related services as defined in section 602(16) and (17) of the Education of the Handicapped Act (20 U.S.C. 1401(16) and (17)) or vocational rehabilitation services available to the individual through a program funded under section 110 of the Rehabilitation Act of 1973 (29 U.S.C. 730).

(4) For waiver applications and renewals approved on or after October 21, 1986, home and community-based services provided to individuals aged 22 through 64 diagnosed as chronically mentally ill who would be placed in an institution for mental diseases. FFP is also not available for such services provided to individuals aged 65 and over and 21 and under as an alternative to institutionalization in an IMD if the State does not include the appropriate optional Medicaid benefits specified at §§ 440.140 and 440.160 of this chapter in its State plan.

(b) FFP is available for expenditures for expanded habilitation services, as described in § 440.180 of this chapter, if the services are included under a waiver or waiver amendment approved by CMS.

(a) Basis and scope. Section 1902(a)(6) of the Act requires State Medicaid agencies to make such reports, in such form and containing such information, as the Secretary may from time to time require, and to comply with such provisions as the Secretary may from time to time find necessary to assure the correctness and verification of such reports. Section 1902(a)(19) of the Act requires States to provide safeguards to assure that eligibility for Medicaid-covered care and services will be determined and provided in a manner that is consistent with simplicity of administration and the best interests of Medicaid beneficiaries. This section describes the reporting requirements for States for section 1915(c) waiver programs, under the authority at section 1902(a)(6) and (a)(19) of the Act.

(b) Compliance reporting—(1) Incident management system. As described in § 441.302(a)(6)—

(i) The State must report, every 24 months, in the form and manner, and at a time, specified by CMS, on the results of an incident management system assessment to demonstrate that it meets the requirements in § 441.302(a)(6).

(ii) CMS may reduce the frequency of reporting to up to once every 60 months for States with incident management systems that are determined by CMS to meet the requirements in § 441.302(a)(6).

(2) Critical incidents. The State must report to CMS annually on the following information regarding critical incidents as defined in § 441.302(a)(6)(i)(A), in the form and manner, and at a time, specified by CMS:

(i) Number and percent of critical incidents for which an investigation was initiated within State-specified timeframes;

(ii) Number and percent of critical incidents that are investigated and for which the State determines the resolution within State-specified timeframes;

(iii) Number and percent of critical incidents requiring corrective action, as determined by the State, for which the required corrective action has been completed within State-specified timeframes.

(3) Person-centered planning. To demonstrate that the State meets the requirements at § 441.301(c)(3)(ii) regarding person-centered planning (as described in § 441.301(c)(1) through (3)), the State must report to CMS annually on the following, in the form and manner, and at a time, specified by CMS—

(i) Percent of beneficiaries continuously enrolled for at least 365 days for whom a reassessment of functional need was completed within the past 12 months. The State may report this metric using statistically valid random sampling of beneficiaries.

(ii) Percent of beneficiaries continuously enrolled for at least 365 days who had a service plan updated as a result of a re-assessment of functional need within the past 12 months. The State may report this metric using statistically valid random sampling of beneficiaries.

(4) Annually, the State will provide CMS with information on the waiver's impact on the type, amount, and cost of services provided under the State plan, in the form and manner, and at a time, specified by CMS.

(c) Reporting on the Home and Community-Based Services Quality Measure Set, as described in § 441.312.

(1) General rules. The State—

(i) Must report every other year, according to the format and schedule prescribed by the Secretary through the process for developing and updating the measure set described in § 441.312(d), on all measures in the Home and Community-Based Services Quality Measure Set that are identified by the Secretary pursuant to § 441.312(d)(1)(ii) of this subpart.

(ii) May report on all other measures in the Home and Community-Based Services Quality Measure Set that are not described in § 441.312(d)(1)(ii) and (iii) of this subpart.

(iii) Must establish, subject to CMS review and approval, State performance targets for each of the measures in the Home and Community-Based Services Quality Measure Set that are identified by the Secretary pursuant to § 441.312(d)(1)(ii) and (iii) of this subpart and describe the quality improvement strategies that the State will pursue to achieve the performance targets.

(iv) May establish State performance targets for each of the measures in the Home and Community-Based Services Quality Measure Set that are not identified by the Secretary pursuant to § 441.312(d)(1)(ii) and (iii) of this subpart and describe the quality improvement strategies that the State will pursue to achieve the performance targets.

(2) Measures identified per § 441.312(d)(1)(iii) of this subpart will be reported by the Secretary on behalf of the State.

(3) In reporting on Home and Community-Based Services Quality Measure Set measures, the State may, but is not required to:

(i) Report on the measures identified by the Secretary pursuant to § 441.312(c) of this subpart for which reporting will be, but is not yet required (that is, reporting has not yet been phased-in).

(ii) Report on the populations identified by the Secretary pursuant to § 441.312(c) of this subpart for whom reporting will be, but is not yet required.

(d) Access reporting. The State must report to CMS annually on the following, in the form and manner, and at a time, specified by CMS:

(1) Waiver waiting lists. (i) A description of how the State maintains the list of individuals who are waiting to enroll in the waiver program, if the State has a limit on the size of the waiver program, as described in § 441.303(f)(6), and maintains a list of individuals who are waiting to enroll in the waiver program. This description must include, but is not limited to:

(A) Information on whether the State screens individuals on the list for eligibility for the waiver program;

(B) Whether the State periodically re-screens individuals on the list for eligibility; and

(C) The frequency of re-screening, if applicable.

(ii) Number of people on the list of individuals who are waiting to enroll in the waiver program, if applicable.

(iii) Average amount of time that individuals newly enrolled in the waiver program in the past 12 months were on the list of individuals waiting to enroll in the waiver program, if applicable.

(2) Access to homemaker, home health aide, personal care, and habilitation services. (i) Average amount of time from when homemaker services, home health aide services, personal care services, and habilitation services, as set forth in § 440.180(b)(2) through (4) and (6), are initially approved to when services began, for individuals newly receiving services within the past 12 months. The State may report this metric using statistically valid random sampling of beneficiaries.

(ii) Percent of authorized hours for homemaker services, home health aide services, personal care services, and habilitation services, as set forth in § 440.180(b)(2) through (4) and (6), that are provided within the past 12 months. The State may report this metric using statistically valid random sampling of beneficiaries.

(e) Payment adequacy—(1) Definitions. As used in this paragraph (e)-

(i) Compensation means:

(A) Salary, wages, and other remuneration as defined by the Fair Labor Standards Act and implementing regulations (29 U.S.C. 201 et seq., 29 CFR parts 531 and 778);

(B) Benefits (such as health and dental benefits, life and disability insurance, paid leave, retirement, and tuition reimbursement); and

(C) The employer share of payroll taxes for direct care workers delivering services authorized under section 1915(c) of the Act.

(ii) Direct care worker means any of the following individuals who may be employed by a Medicaid provider, State agency, or third party; contracted with a Medicaid provider, State agency, or third party; or delivering services under a self-directed services delivery model:

(A) A registered nurse, licensed practical nurse, nurse practitioner, or clinical nurse specialist who provides nursing services to Medicaid beneficiaries receiving home and community-based services available under this subpart;

(B) A licensed or certified nursing assistant who provides such services under the supervision of a registered nurse, licensed practical nurse, nurse practitioner, or clinical nurse specialist;

(C) A direct support professional;

(D) A personal care attendant;

(E) A home health aide; or

(F) Other individuals who are paid to provide services to address activities of daily living or instrumental activities of daily living, behavioral supports, employment supports, or other services to promote community integration directly to Medicaid beneficiaries receiving home and community-based services available under this subpart, including nurses and other staff providing clinical supervision.

(iii) Excluded costs means costs that are not included in the calculation of the percentage of Medicaid payments to providers that are spent on compensation for direct care workers. Such costs are limited to:

(A) Costs of required trainings for direct care workers (such as costs for qualified trainers and training materials);

(B) Travel costs for direct care workers (such as mileage reimbursement or public transportation subsidies); and

(C) Cost of personal protective equipment for direct care workers.

(2) Payment adequacy reporting. (i) Except as provided in paragraphs (e)(2)(ii) and (e)(4) of this section, the State must report to CMS annually on the percentage of total payments (not including excluded costs) for furnishing homemaker services, home health aide services, personal care, and habilitation services, as set forth in § 440.180(b)(2) through (4) and (6), that is spent on compensation for direct care workers, at the time and in the form and manner specified by CMS. The State must report separately for each service and, within each service, must separately report services that are self-directed and services delivered in a provider-operated physical location for which facility-related costs are included in the payment rate.

(ii) If the State provides that homemaker, home health aide, personal care services, or habilitation services, as set forth at § 440.180(b)(2) through (4) and (6), may be furnished under a self-directed services delivery model in which the beneficiary directing the services sets the direct care worker's payment rate, then the State must exclude such payment data from the reporting required in paragraph (e) of this section.

(3) Payment adequacy reporting readiness. One year prior to the applicability date for paragraph (e)(2)(i) of this section, the State must report on its readiness to comply with the reporting requirement in (e)(2)(i) of this section.

(4) Exclusion of data from the Indian Health Service and Tribal health programs that are subject to 25 U.S.C. 1641. States must exclude the Indian Health Service and Tribal health programs subject to the requirements at 25 U.S.C. 1641 from the reporting required in paragraph (e) of this section, and not require submission of data by, or include any data from, the Indian Health Service or Tribal health programs subject to the requirements at 25 U.S.C. 1641 for the State's reporting required under paragraph (e)(2) of this section.

(f) Applicability dates. (1) The State must comply with the reporting requirements at paragraphs (b) and (d) of this section beginning 3 years after July 9, 2024; and in the case of a State that implements a managed care delivery system under the authority of sections 1915(a), 1915(b), 1932(a), or 1115(a) of the Act and includes HCBS in the MCO's, PIHP's, or PAHP's contract, the first rating period for contracts with the MCO, PIHP, or PAHP beginning on or after the date that is 3 years after July 9, 2024.

(2) The State must comply with the reporting requirements at paragraphs (c) and (e) of this section beginning 4 years after July 9, 2024; and in the case of a State that implements a managed care delivery system under the authority of sections 1915(a), 1915(b), 1932(a), or 1115(a) of the Act and includes HCBS in the MCO's, PIHP's, or PAHP's contract, the first rating period for contracts with the MCO, PIHP or PAHP beginning on or after the date that is 4 years after July 9, 2024.

(a) Basis and scope. Section 1102(a) of the Act provides the Secretary of HHS with authority to make and publish rules and regulations that are necessary for the efficient administration of the Medicaid program. Section 1902(a)(6) of the Act requires State Medicaid agencies to make such reports, in such form and containing such information, as the Secretary may from time to time require, and to comply with such provisions as the Secretary may from time to time find necessary to assure the correctness and verification of such reports. This section describes the Home and Community-Based Services Quality Measure Set, which States are required to use in section 1915(c) waiver programs to promote public transparency related to the administration of Medicaid-covered HCBS, under the authority at sections 1102(a) and 1902(a)(6) of the Act.

(b) Definitions. As used in this subpart—

(1) Attribution rules means the process States use to assign beneficiaries to a specific health care program or delivery system for the purpose of calculating the measures on the Home and Community-Based Services Quality Measure Set.

(2) Home and Community-Based Services Quality Measure Set means the Home and Community-Based Services Quality Measures for Medicaid established and updated by the Secretary through a process that allows for public input and comment, including through the Federal Register, as described in paragraph (d) of this section.

(c) Responsibilities of the Secretary. The Secretary shall—

(1) Identify, and update no more frequently than every other year, beginning no later than December 31, 2026, the quality measures to be included in the Home and Community-Based Services Quality Measure Set as defined in paragraph (b) of this section.

(2) Make technical updates and corrections to the Home and Community-Based Services Quality Measure Set annually as appropriate.

(3) Consult at least every other year with States and other interested parties identified in paragraph (g) of this section to—

(i) Establish priorities for the development and advancement of the Home and Community-Based Services Quality Measure Set;

(ii) Identify newly developed or other measures which should be added including to address any gaps in the measures included in the Home and Community-Based Services Quality Measure Set;

(iii) Identify measures which should be removed as they no longer strengthen the Home and Community-Based Services Quality Measure Set; and

(iv) Ensure that all measures included in the Home and Community-Based Quality Measure Set reflect an evidence-based process including testing, validation, and consensus among interested parties; are meaningful for States; and are feasible for State-level, program-level, or provider-level reporting as appropriate.

(4) In consultation with States, develop and update, no more frequently than every other year, the Home and Community-Based Services Quality Measure Set Quality Measure Set using a process that allows for public input and comment as described in paragraph (d) of this section.

(d) Process for developing and updating the HCBS Quality Measure Set. The process for developing and updating the Home and Community-Based Services Quality Measure Set Quality Measure Set will address all of the following:

(1) Identification of all measures in the Home and Community-Based Services Quality Measure Set, including:

(i) Measures newly added and measures removed from the prior version of the Home and Community-Based Services Quality Measure Set;

(ii) The specific measures for which reporting is mandatory;

(iii) The measures for which the Secretary will complete reporting on behalf of States and the measures for which States may elect to have the Secretary report on their behalf; and

(iv) The measures, if any, for which the Secretary will provide States with additional time to report, as well as how much additional time the Secretary will provide, in accordance with paragraph (c) of this section.

(2) Technical information to States on how to collect and calculate the data on the Home and Community-Based Services Quality Measure Set.

(3) Standardized format and reporting schedule for reporting measure data required under this section.

(4) Procedures that State agencies must follow in reporting measure data required under this section.

(5) Identification of the populations for which States must report the measures identified by the Secretary under paragraph (e) of this section, which may include, but is not limited to beneficiaries—

(i) Receiving services through specified delivery systems, such as those enrolled in a MCO, PIHP, or PAHP as defined in § 438.2 or receiving services on a fee-for-service basis;

(ii) Who are dually eligible for Medicare and Medicaid, including beneficiaries whose medical assistance is limited to payment of Medicare premiums or cost sharing;

(iii) Who are older adults;

(iv) Who have physical disabilities;

(v) Who have intellectual and development disabilities;

(vi) Who have serious mental illness; and

(vii) Who have other health conditions.

(6) Technical information on attribution rules for determining how States must report on measures for beneficiaries who are included in more than one population, as described in paragraph (d)(5) of this section, during the reporting period.

(7) The subset of measures among the measures in the Home and Community-Based Services Quality Measure Set that must be stratified by race, ethnicity, sex, age, rural/urban status, disability, language, or such other factors as may be specified by the Secretary and informed by consultation every other year with States and interested parties in accordance with paragraphs (b)(2) and (g) of this section.

(8) Describe how to establish State performance targets for each of the measures in the Home and Community-Based Services Quality Measure Set.

(e) Phasing in of certain reporting. As part of the process that allows for developing and updating the Home and Community-Based Services Quality Measure Set described in paragraph (d) of this section, the Secretary may provide that mandatory State reporting for certain measures and reporting for certain populations of beneficiaries will be phased in over a specified period of time, taking into account the level of complexity required for such State reporting.

(f) Selection of measures for stratification. In specifying which measures, and by which factors, States must report stratified measures consistent with paragraph (d)(7) of this section, the Secretary will take into account whether stratification can be accomplished based on valid statistical methods and without risking a violation of beneficiary privacy and, for measures obtained from surveys, whether the original survey instrument collects the variables necessary to stratify the measures, and such other factors as the Secretary determines appropriate; the Secretary will require stratification of 25 percent of the measures in the Home and Community-Based Services Quality Measure Set for which the Secretary has specified that reporting should be stratified by 4 years after July 9, 2024, 50 percent of such measures by 6 years after July 9, 2024, and 100 percent of measures by 8 years after July 9, 2024.

(g) Consultation with interested parties. For purposes of paragraph (c)(2) of this section, the Secretary must consult with interested parties as described in this paragraph to include the following:

(1) State Medicaid Agencies and agencies that administer Medicaid-covered home and community-based services.

(2) Health care and home and community-based services professionals, including members of the allied health professions who specialize in the care and treatment of older adults, children and adults with disabilities, and individuals with complex medical needs.

(3) Health care and home and community-based services professionals (including members of the allied health professions), providers, and direct care workers who provide services to older adults, children and adults with disabilities, and individuals with complex medical and behavioral health care needs who live in urban and rural medically underserved communities or who are members of distinct population sub-groups at heightened risk for poor outcomes.

(4) Providers of home and community-based services.

(5) Direct care workers and national organizations representing direct care workers.

(6) Consumers and national organizations representing older adults, children and adults with disabilities, and individuals with complex medical needs.

(7) National organizations and individuals with expertise in home and community-based services quality measurement.

(8) Voluntary consensus standards setting organizations and other organizations involved in the advancement of evidence-based measures of health care.

(9) Measure development experts.

(10) Such other interested parties as the Secretary may determine appropriate.

(a) The State must operate a website consistent with § 435.905(b) of this chapter that provides the results of the reporting requirements specified at §§ 441.302(k)(6) and 441.311. The State must:

(1) Include all content on one website, either directly or by linking to websites of individual MCO's, PIHP's, or PAHP's, as defined in § 438.2 of this chapter;

(2) Include clear and easy to understand labels on documents and links;

(3) Verify no less than quarterly, the accurate function of the website and the timeliness of the information and links; and

(4) Include prominent language on the website explaining that assistance in accessing the required information on the website is available at no cost and include information on the availability of oral interpretation in all languages and written translation available in each non-English language, how to request auxiliary aids and services, and a toll-free and TTY/TDY telephone number.

(b) CMS must report on its website the results of the reporting requirements specified at §§ 441.302(k)(6) and 441.311 that the State reports to CMS.

(c) The State must comply with these requirements beginning 3 years after July 9, 2024; and in the case of the State that implements a managed care delivery system under the authority of sections 1915(a), 1915(b), 1932(a), and 1115(a) of the Act and includes HCBS in the MCO's, PIHP's, or PAHP's contract, the first rating period for contracts with the MCO, PIHP, or PAHP beginning on or after the date that is 3 years after July 9, 2024.