[Federal Register: January 18, 2008 (Volume 73, Number 13)]
[Proposed Rules]
[Page 3545-3566]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr18ja08-24]
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Part II
Department of Health and Human Services
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Centers for Medicare & Medicaid Services
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42 CFR Part 441
Medicaid Program; Self-Directed Personal Assistance Services Program
State Plan Option (Cash and Counseling); Proposed Rule
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Part 441
[CMS-2229-P]
RIN 0938-AO52
Medicaid Program; Self-Directed Personal Assistance Services
Program State Plan Option (Cash and Counseling)
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Proposed rule.
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SUMMARY: This proposed rule provides guidance to States that want to
administer self-directed personal assistance services through their
State plans.
DATES: Comment Date: To be assured consideration, comments must be
received at one of the addresses provided below, no later than 5 p.m.
on February 19, 2008.
ADDRESSES: In commenting, please refer to file code CMS-2229-P. Because
of staff and resource limitations, we cannot accept comments by
facsimile (FAX) transmission.
You may submit comments in one of four ways (no duplicates,
please):
1. Electronically. You may submit electronic comments on specific
issues in this regulation to http://www.cms.hhs.gov/eRulemaking. Click
on the link ``Submit electronic comments on CMS regulations with an
open comment period.'' (Attachments should be in Microsoft Word,
WordPerfect, or Excel; however, we prefer Microsoft Word.)
2. By regular mail. You may mail written comments (one original and
two copies) to the following address only:
Centers for Medicare & Medicaid Services, Department of Health and
Human Services, Attention: CMS-2229-P, P.O. Box 8016, Baltimore, MD
21244-8016.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By express or overnight mail. You may send written comments (one
original and two copies) to the following address only:
Centers for Medicare & Medicaid Services, Department of Health and
Human Services, Attention: CMS-2229-P, Mail Stop C4-26-05, 7500
Security Boulevard, Baltimore, MD 21244-1850.
4. By hand or courier. If you prefer, you may deliver (by hand or
courier) your written comments (one original and two copies) before the
close of the comment period to one of the following addresses. If you
intend to deliver your comments to the Baltimore address, please call
telephone number (410)-786-7195 in advance to schedule your arrival
with one of our staff members.
Room 445-G, Hubert H. Humphrey Building, 200 Independence Avenue,
SW., Washington, DC 20201; or 7500 Security Boulevard, Baltimore, MD
21244-1850.
(Because access to the interior of the HHH Building is not readily
available to persons without Federal Government identification,
commenters are encouraged to leave their comments in the CMS drop slots
located in the main lobby of the building. A stamp-in clock is
available for persons wishing to retain a proof of filing by stamping
in and retaining an extra copy of the comments being filed.)
Comments mailed to the addresses indicated as appropriate for hand
or courier delivery may be delayed and received after the comment
period.
Submission of comments on paperwork requirements. You may submit
comments on this document's paperwork requirements by mailing your
comments to the addresses provided at the end of the ``Collection of
Information Requirements'' section in this document.
For information on viewing public comments, see the beginning of
the SUPPLEMENTARY INFORMATION section.
FOR FURTHER INFORMATION CONTACT: Marguerite Schervish, (410) 786-7200.
SUPPLEMENTARY INFORMATION:
Submitting Comments: We welcome comments from the public on all
issues set forth in this rule to assist us in fully considering issues
and developing policies. You can assist us by referencing the file code
CMS-2229-IFC and the specific ``issue identifier'' that precedes the
section on which you choose to comment.
Inspection of Public Comments: All comments received before the
close of the comment period are available for viewing by the public,
including any personally identifiable or confidential business
information that is included in a comment. We post all comments
received before the close of the comment period on the following Web
site as soon as possible after they have been received: http://www.cms.hhs.gov/eRulemaking.
Click on the link ``Electronic Comments on
CMS Regulations'' on that Web site to view public comments.
Comments received timely will also be available for public
inspection as they are received, generally beginning approximately 3
weeks after publication of a document, at the headquarters of the
Centers for Medicare & Medicaid Services, 7500 Security Boulevard,
Baltimore, Maryland 21244, Monday through Friday of each week from 8:30
a.m. to 4 p.m. To schedule an appointment to view public comments,
phone 1-800-743-3951.
I. Background
[If you choose to comment on issues in this section, please include
the caption ``BACKGROUND'' at the beginning of your comments.]
A. Section 6087 of the Deficit Reduction Act of 2005
The Deficit Reduction Act (DRA) of 2005 was enacted into law on
February 8, 2006 (Pub. L. 109-171). Section 6087 of the DRA provided
for a new State Plan option that is built on the experiences and
lessons learned from the disability rights movement and States that
pioneered self-direction programs. Self-direction is an important
component of independence as it promotes quality, access, and choice.
Specifically, section 6087 of the DRA amended section 1915 of the
Social Security Act (the Act) to add new paragraph (j). Section
1915(j)(1) of the Act would allow a State the option to provide, as
``medical assistance,'' payment for part or all of the cost of self-
directed personal assistance services (PAS) provided pursuant to a
written plan of care to individuals for whom there has been a
determination that, but for the provision of such services, the
individuals would require and receive State Plan personal care
services, or section 1915(c) home and community-based waiver services.
Section 1915(j)(1) of the Act also expressly excludes Medicaid payment
for room and board. Finally, section 1915(j)(1) of the Act requires
that self-directed PAS may not be provided to individuals who reside in
a home or property that is owned, operated, or controlled by a provider
of services, not related by blood or marriage.
Section 1915(j)(2) of the Act sets forth five assurances that
States must provide in order for the Secretary to approve self-directed
PAS under this State Plan option. First, States must assure that
necessary safeguards are in place to protect the health and welfare of
individuals provided services under this State Plan option, and to
assure the financial accountability for funds expended with respect to
such services. Second, States must assure the provision of an
evaluation of the need for State Plan personal care services, or
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personal services under a section 1915(c) waiver. Third, States must
assure that individuals who are likely to require State Plan personal
care services, or section 1915(c) waiver services, are informed of the
feasible alternatives to the self-directed PAS State Plan option (if
available) such as personal care under the regular State plan option or
personal assistance services under a section 1915(c) waiver program.
Fourth, States must assure that they provide a support system that
ensures that participants in the self-directed PAS program are
appropriately assessed and counseled prior to enrollment and are able
to manage their budgets.
Fifth, States must assure that they will provide to the Secretary
an annual report on the number of individuals served under the State
Plan option and the total expenditures on their behalf in the
aggregate. States must also provide an evaluation of the overall impact
of this new option on the health and welfare of participating
individuals compared to non-participants every 3 years.
Section 1915(j)(3) of the Act indicates that States that offer
self-directed PAS under this State Plan option are not subject to the
statewideness and comparability requirements of the Act.
Section 1915(j)(4)(A) of the Act defines self-directed PAS to mean
personal care and related services under the State Plan, or home and
community-based waiver services under a section 1915(c) waiver,
provided to a participant eligible under this self-directed PAS State
Plan option. Furthermore, the statute states that within an approved
self-directed services plan and budget, individuals can purchase
personal assistance and related services and hire, fire, supervise, and
manage the individuals providing such services.
Section 1915(j)(4)(B) of the Act gives States the option to permit
participants to hire any individual capable of providing the assigned
tasks, including legally liable relatives, as paid providers of the
services. The statute also gives States the option to permit
participants to purchase items that increase independence or substitute
for human assistance to the extent that expenditures would otherwise be
made for the human assistance.
Section 1915(j)(5) of the Act sets forth the requirements for an
``approved self-directed services plan and budget''. Section
1915(j)(5)(A) of the Act authorizes the individual or a defined
representative to exercise choice and control over the budget,
planning, and purchase of self-directed PAS, including the amount,
duration, scope, provider, and location of service provision. Section
1915(j)(5)(B) of the Act requires an assessment of participants' needs,
strengths, and preferences for PAS. Section 1915(j)(5)(C) of the Act
requires States to develop a service plan based on the assessment of
need using a person-centered planning process. Section 1915(j)(5)(D) of
the Act requires States to develop and approve a budget for
participants' services and supports based on the assessment of need and
service plan and on a methodology that uses valid, reliable cost data,
is open to public inspection, and includes a calculation of the
expected cost of such services if those services were not self-
directed. The budget may not restrict access to other medically
necessary care and services furnished under the State Plan and approved
by the State but not included in the budget.
Section 1915(j)(5)(E) of the Act requires that there are
appropriate quality assurance and risk management techniques used in
establishing and implementing the service plan and budget that
recognize the roles and responsibilities in obtaining services in a
self-directed manner and assure the appropriateness of such plan and
budget based upon the participant's resources and capabilities.
Section 1915(j)(6) of the Act indicates that States may employ a
financial management entity to make payments to providers, track costs,
and make reports. Payment for the activities of the financial
management entity shall be at the administrative rate established in
section 1903(a) of the Act.
B. History of Self-Direction
The Independent Living movement in the 1960s was premised on the
concept that people with disabilities should have the same civil
rights, options, and control over choices in their own lives as do
people without disabilities, and that individuals with cognitive
impairments should not be prohibited from exercising control over their
lives. One mechanism that allows individuals to exercise more
involvement, control, and choice over their lives is self-directed
care. Self-directed care is a service delivery mechanism that empowers
individuals with the opportunity to select, direct, and manage their
needed services and supports identified in an individualized service
plan and budget. Self-direction is not a service, but rather an
alternative to the traditional service delivery model whereby a worker
hired by the Medicaid recipient will furnish the Medicaid service to
the Medicaid recipient and the Medicaid recipient retains the control
and authority over who provides the services, how the services are
provided, the hours they work, and their rate of pay.
Two national pilot projects demonstrated the success of self-
directed care. During the mid-1990s, the Robert Wood Johnson Foundation
awarded grants to develop self-determination in 19 States. These
projects primarily evolved into Medicaid-funded programs under the
section 1915(c) home and community-based services waiver authority. In
the late 1990s, the Robert Wood Johnson Foundation again awarded grants
to develop the ``Cash and Counseling'' national demonstration and
evaluation project in three States. These projects evolved into
demonstration programs under the section 1115 authority of the Act.
Evaluations were conducted in both of these national projects.
Results in both projects were similar--persons directing their personal
care experienced fewer unnecessary institutional placements,
experienced higher levels of satisfaction, had fewer unmet needs,
experienced higher continuity of care because of less worker turnover,
and maximized the efficient use of community services and supports.
On February 1, 2001, the President announced the New Freedom
Initiative, which included the following three elements: Promoting full
access to community life through efforts to implement the Supreme
Court's decision in Olmstead vs. L.C., 527 U.S. 581 (1999)
(``Olmstead''), integrating Americans with disabilities into the
workforce with programs under the Ticket to Work and Work Incentives
Improvement Act of 1999 (TWWIIA) (Pub. L. 106-170, enacted on December
19, 1999), and creating the National Commission on Mental Health. The
President subsequently expanded this initiative through Executive Order
13217 (June 18, 2001) by directing Federal agencies to work together to
``tear down the barriers'' to community living by developing a
government-wide framework for providing elders and people with
disabilities the supports necessary to learn and develop skills, engage
in productive work, choose where to live, and fully participate in
community life.
On May 9, 2002, as part of its response to the New Freedom
Initiative, the Department of Health and Human Services unveiled the
Independence Plus templates and the initiative to help States broaden
their ability to offer individuals the opportunity to maximize choice
and control over
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services in their own homes and communities. The Department developed
two templates that allowed States to choose different self-directed
design features to satisfy their unique programs. The section 1115
demonstration template was developed for States that wanted to permit
individuals to receive a prospective cash allowance equivalent to the
amount of their Medicaid personal care benefit. Under the section 1115
authority, individuals could directly manage their cash allowance and
direct the purchases of their personal care and related services and
goods. For those States not wanting to offer the cash allowance, a
section 1915(c) home and community-based services waiver template was
developed. The section 1915(c) waiver template allowed Medicaid
recipients to self-direct a wide array of services, so long as these
services are required to keep a person from being institutionalized in
a hospital, nursing facility or intermediate care facility for the
mentally retarded (ICFMR).
However, a program was only given the Independence Plus designation
when a State demonstrated a strong commitment to self-direction by
developing a comprehensive program that offered a person-centered
planning process, individualized budgeting, self-directed supports
including financial management services, and a quality assurance and
improvement plan. The intended purposes of the Independence Plus
Initiative were to:
Delay or avoid institutional or other high cost out-of-
home placement by strengthening supports to individuals or families.
Recognize the essential role of the individual or family
in the planning and purchasing of health care supports and services by
providing individual or family control over an agreed upon resource
amount.
Encourage cost effective decision-making in the purchase
of supports and services.
Increase individual or family satisfaction through the
promotion of self-direction, control, and choice--a major theme
expressed during the New Freedom Initiative-National Listening Session.
Promote solutions to the problem of worker availability.
Provide supports including financial management services
to support and sustain individuals or families as they direct their own
services.
Assist States with meeting their legal obligations under
the Americans with Disabilities Act (ADA) and the U.S. Supreme Court's
Olmstead decision.
Provide flexibility for States seeking to increase the
opportunities afforded individuals and families in deciding how best to
enlist or sustain home and community services.
A new section 1915(c) waiver application was also developed effective
spring 2005 that incorporates our requirements for an Independence Plus
program.
In 2003 we awarded 12 systems change grants to States for the
development of Independence Plus programs. On October 7, 2004, the
Robert Wood Johnson Foundation awarded a second round of ``Cash and
Counseling'' grants to 11 States to develop Independence Plus programs
using either the Section 1915(c) waiver or section 1115 demonstration
application. As of March 20, 2006, 15 States had 17 approved
Independence Plus programs. In addition, there were 2 other States that
included self-direction options in their section 1115 demonstrations
and a multitude of States that offered self-directed program options in
their section 1915(c) home and community-based services waiver
programs.
II. Provisions of the Proposed Rule
[If you choose to comment on issues in this section, please include
the caption ``PROVISIONS OF THE PROPOSED RULE'' at the beginning of
your comments.]
Section CFR 441.450 Basis, Scope and Definitions
This proposed rule would implement section 1915(j) of the Act,
allowing States to provide a self-directed PAS through a State Plan
option. We propose to implement this provision in 42 CFR part 441
subpart J. This part would set forth the requirements of the self-
directed PAS delivery model administered through the Medicaid State
plan and indicates how individuals may qualify to participate in a
self-directed PAS State plan option. The overall purpose of section
1915(j) of the Act is to allow States the option to amend their State
Plans to offer individuals the opportunity to self-direct their PAS.
This self-directed PAS State plan option is a service delivery model
and is premised in the experience and lessons learned from the self-
direction and Independence Plus section 1115 demonstrations and section
1915(c) waiver programs. Based on the demonstrated success of self-
directed services in these programs, we learned that individuals can
successfully exercise decision-making authority over their PAS and
supports identified in an individualized service plan and budget.
Consequently, in 42 CFR 441.450(b), we propose that individuals be
allowed to exercise decision-making authority in identifying,
accessing, managing and purchasing their PAS. We propose a list of the
minimum activities over which individuals may exercise authority, in
order to implement the basic elements of self-direction, which convey
control over both employer-related and budget-related activities.
Individuals' decision-making authority includes, at a minimum, the
purchase of PAS and supports for PAS, recruiting workers, hiring and
discharging workers, specifying worker qualifications, determining
worker duties, scheduling workers, supervising workers, evaluating
worker performance, determining the amount paid for a service, support,
or item, scheduling when services are provided, identifying service
workers, and reviewing and approving invoices. This proposed list was
determined through our review of States' experiences with existing
self-directed programs and we believe it represents the minimum
authority required by an individual to self-direct care. A State can
include additional activities in its submitted State plan option
request.
Since we view self-directed care as a method of service delivery
rather than cash assistance, we do not view the following Medicaid
provisions as a barrier to use of the self-directed PAS option:
When States elect to offer a cash option to participants,
funds made available to the individual solely for the purchase of
medically necessary items and services (as outlined in the approved
service plan) are not income or resources to the individual. Thus, they
would not be counted for purposes of determining or redetermining
eligibility (under 1902(a)(10)(A) or 1902(a)(10)(C) of the Act, or any
demonstration project).
Medicaid requirements for direct payment to providers
found at section 1902(a)(32) of the Act and prepayment review found at
section 1902(a)(37)(B) of the Act may be satisfied by specific
responsibilities individuals undertake as part of self-direction, such
as activities to effectively manage their funds, review all payment
requests, and make payments to providers, either directly or through a
financial management entity. These responsibilities are further
described in Sec. 441.470.
In the service delivery model of self-direction, the
mechanisms that an
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individual undertakes to document delivery of services, such as having
timesheets signed by the provider of services, should include the basic
elements needed to satisfy the objective of the Medicaid requirements
on provider agreements found at section 1902(a)(27) of the Act.
There are many terms specific to the self-directed PAS State plan
option. Because of the need to be consistent with their usage within
the context of section 1915(j), we are proposing to define the
following terms for purposes of this section in Sec. 441.450(c):
Assessment of Need
Section 1915(j)(5)(B) of the Act requires an assessment of a
participant's needs, strengths, and preferences for PAS. Our proposed
definition at Sec. 441.450(c) reflects this statutory language. An
assessment of an individual's needs, strengths and preferences is
crucial because it forms the basis for the identification of the needed
services and supports that will be authorized in the individual's
service plan and the subsequent service budget. It is also important to
identify an individual's strengths and preferences that will enable
self-direction of PAS. Therefore, we also propose in Sec. 441.450(c)
that the assessment includes one or more processes to obtain
information about an individual's health condition, personal goals and
preferences for the provision of services, functional limitations, age,
school, employment, household, and other factors that are relevant to
the authorization and provision of services. We believe our proposed
definition reflects the need for such an assessment to be a
comprehensive assessment of all an individual's needs.
Individualized Backup Plan
We propose to add a definition for an individualized backup plan
because we think it is an important beneficiary protection and a
necessary communication device to convey important information should a
situation occur that would pose a risk of harm to an individual that
would necessitate a plan to ensure alternative arrangements for service
delivery. Accordingly, in Sec. 441.450(c), we would define an
individualized backup plan to mean a written plan that addresses
critical contingencies or incidents that would pose a risk of harm to
the participant's health or welfare. We propose to require that the
individualized backup plan be incorporated into the participant's
service plan. For example, a typical critical contingency or incident
could include the failure of a worker to appear when scheduled to
provide necessary services and the individualized backup plan would
include the steps necessary to continue to provide the necessary
services in such a case. The individualized backup plan could include
arranging for designated provider agencies to furnish staff support on
an on-call basis, or use of other services and agencies in existence in
the participant's community. We note each backup plan must necessarily
be crafted to meet the unique needs and circumstances of each
participant.
Legally Liable Relatives
Section 1915(j)(4)(B)(i) of the Act permits, at the State's option,
participants in the self-directed PAS option to hire legally liable
relatives as paid providers of services. In 42 CFR 441.450(c), we
propose to define legally liable relatives to mean persons who have a
duty under the provisions of State law to care for another person.
Legally liable relatives may include: (1) The parent (biological or
adoptive) of a minor child or the guardian of a minor child who must
provide care to the child, (2) legally-assigned caretaker relatives, or
(3) a spouse. It has been our experience that these are the most
commonly used relationships in providing care, but we solicit comments
on other possible relationships that could be used.
Self-Directed Personal Assistance Services
Section 1915(j)(4)(A) of the Act defines self-directed PAS to mean
personal care and related services, or home and community-based
services otherwise available under the State Plan or a 1915(c) waiver,
that are provided to an individual determined to be eligible for the
self-directed PAS program. We propose at Sec. 441.450(c) to adopt the
statutory language in our definition. We further note that we believe
it is clear that ``personal care and related services'' refers to those
services that an individual receives that are within the State's
defined personal care State Plan optional service (for example,
activities of daily living, instrumental activities of daily living,
supervision, and cueing). Notwithstanding an individual's eligibility
to participate in the self-directed PAS option because of their
eligibility for and receipt of services under a State Plan personal
care services option or a section 1915(c) waiver program, we also
propose that self-directed PAS include, at the State's option, items
that increase an individual's independence or substitute for human
assistance, according to section 1915(j)(4)(B)(ii) of the Act. We
believe it is clear that the State has the option to allow the
individual to acquire these items, and that these items can be
considered as self-directed PAS.
Self-Direction
Section 1915(j)(5)(A) of the Act defines self-direction to mean the
opportunity for participants or their representatives to exercise
choice and control over the budget, planning, and purchase of self-
directed PAS, including the amount, duration, scope, provider, and
location of service provision. We propose to reflect this statutory
definition in the rule at Sec. 441.450(c).
Service Budget
Section 1915(j)(5)(D) of the Act sets out the requirement for a
service budget as part of an ``approved self-directed services plan and
budget.'' We propose, at Sec. 441.450(c), to define a service budget
to mean an amount of funds that is under the control and direction of a
participant when the State has selected the State Plan option for
provision of self-directed PAS. We further propose that the budget be
developed using a person-centered and directed process, and be
individually tailored in accordance with the participant's needs and
personal preferences as established in the service plan. We further
note that the statutory requirements that the budget be based upon an
assessment of need, approved by the State, developed using a valid
methodology, is open to public inspection, and includes a calculation
of the expected cost of the PAS if not self-directed are inherent in
the process for approval of a self-directed PAS State plan option and
we are not proposing these requirements as part of the proposed
definition.
Service Plan
The statute at section 1915(j)(5)(C) of the Act references the
requirement for a service plan to be developed and approved by the
State based on an assessment of need through a person-centered process.
At Sec. 441.450(c), we propose to define a service plan to mean the
written document that specifies the services and supports (regardless
of funding source) that are to be furnished to meet the needs of a
participant in the self-directed PAS option so the participant can
successfully direct the PAS and live in the community. We believe that
an assessment of an individual's needs, strengths and preferences is
crucial because it forms the basis for the identification of the needed
services and supports that will
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be authorized in the individual's service plan and the subsequent
service budget.
We also propose to reflect the statutory requirement that the
service plan be based on the assessment of need using a person-centered
and directed planning process. We also propose to incorporate the
principles of a person-centered planning process since we believe that
the service plan must build upon the participant's capacity to actively
engage in and lead the development of the plan, including identifying
persons who will be involved in the process. We anticipate that States
will provide individuals with information, assistance and training, as
needed or desired, in advance of and during the service planning
process in order to help them develop their service plans, thereby
ensuring that the plan reflects their needs, strengths and preferences.
Specifically, we propose to require that the process build upon the
participant's capacity to engage in activities that promote community
life and that respects the participant's preferences, choices, and
abilities. We also propose to allow families, friends and
professionals, as desired or required by the participant, to be
involved in the service-planning process.
Support System
Section 1915(j)(2)(D) of the Act requires that States provide a
support system that ensures that participants are appropriately
assessed and counseled prior to their decision to participate in the
self-directed PAS State Plan option and are able to manage their
budgets. The statute further requires that additional counseling and
management support may be provided at the request of the individual. In
Sec. 441.450(c), we propose to define support system to mean
information, counseling, training, and assistance that support the
participant (or the participant's family or representative, as
appropriate) in identifying, accessing, managing, and directing their
PAS and supports and in purchasing their PAS identified in the service
plan and budget.
The following proposed provisions of subpart J deal with General
Administration.
Section 441.452 Self-Direction: General
We note that the statute is written such that States must have in
place, before electing the self-directed PAS option, personal care
services through their State plan, or home and community-based services
in a section 1915(c) waiver program. In this way, States that choose to
amend their State plans to add self-directed PAS, will have both the
traditional delivery system (that is, non-self-directed) and the self-
directed PAS service delivery option available in the event that
individuals voluntary disenroll from or are involuntarily disenrolled
from the self-directed PAS service delivery option. This also reflects
the choice requirement for such individuals as set forth in section
1915(j)(2)(C) of the Act. In the traditional delivery system, the
provider of the PAS is an entity such as a home health agency. The
entity, and not the Medicaid recipient, exercises authority over who
will furnish the PAS and retains the control and authority over how the
services are provided, the worker's hours, and the worker's rate of
pay.
We are also proposing to require that the State's assessment of an
individual's needs should form the basis for the level of services for
which the individual is eligible. This requirement will ensure that,
regardless of service delivery system, individuals will receive the
services identified in the assessment of need. The proposed regulation
should not be construed as affecting an individual's Medicaid
eligibility, including that of an individual whose Medicaid eligibility
is attained through receipt of section 1915(c) waiver services. We are
proposing in Sec. 441.452 to reflect the general concepts of section
1915(j)(1) statutory requirements as noted above. We are available to
all States to provide technical assistance in structuring this new
self-directed PAS State Plan option.
Section 441.454 Use of Cash
In the section 1115 self-direction demonstration programs,
participants could receive a prospective cash allowance equivalent to
the amount of Medicaid expenditures for the services included in the
demonstration and could, if they chose this option, directly manage
their cash allowance. We learned that participants who chose to
directly manage their cash allowance were able to do so successfully
and that they became more prudent purchasers of their needed supports
and services. Some individuals also chose to perform all the employer
tax-related responsibilities that are associated with being an employer
of record, while others desired to use a fiscal/employer agent or
financial management entity to help them with some or all of these
responsibilities.
We are aware that individuals who have been directly receiving and
managing their cash allowance wish to continue to have this option. We
are also aware that individuals in States where this option has not
heretofore been available wish to be able to access this option.
Accordingly, we are proposing in Sec. 441.454, that States can elect
to disburse cash prospectively to participants who are self-directing
their PAS and must ensure compliance with the IRS requirements if they
adopt this option. Further, if the cash option is made available by the
State, we would require States to permit individuals who select the
cash option the choice of whether to use a financial management entity.
Individuals must be given flexibility to determine whether to use a
financial management entity, and the functions, if any, to be performed
on their behalf by the financial management entity. For example, some
individuals may want the financial management entity to perform all
employer-related tax functions, while they retain responsibility for
paying their providers of PAS. Individuals choosing not to use a
financial management entity must comply with all employer-related tax
functions of the IRS requirements. However, we are also proposing that
if States choose to allow the cash option, that they make available a
financial management entity to participants who have demonstrated,
after additional counseling, information, training, or assistance, that
they cannot effectively manage the cash option.
Section 441.456 Voluntary Disenrollment
We understand that a self-directed service delivery model may not
necessarily work for everyone. Individuals who initially elect to self-
direct their PAS may subsequently decide to move to a traditional
service delivery system. At Sec. 441.456, we propose to specify that
individuals may voluntarily disenroll from the self-directed PAS State
plan option at any time and elect to receive their services through the
traditional service delivery system. As required by statute, PAS will
be offered to the individual so long as the individual still qualifies
for State Plan personal care services or home and community based
services provided through a 1915(c) waiver program.
If individuals decide to leave the self-directed care option, we
want to be assured that individuals continue to receive the services
for which they are eligible and that their health and welfare are
maintained. Accordingly, we propose to require that States specify in
the State plan the safeguards that will be in place to ensure
continuity of services during the transition from self-directed
services. In order to effectuate a prompt and efficient transition, we
would expect that any revisions to the service plan be made promptly
and that
[[Page 3551]]
participants are quickly linked with alternate service providers to
prevent a break in the delivery of services.
Section 441.458 Involuntary Disenrollment
We understand there may be circumstances, where in the interest of
the participant's health and welfare, the State may wish to
involuntarily disenroll the participant from the self-directed PAS
option. For example, involuntary disenrollment may be necessary when
the individual does not carry out the necessary responsibilities,
thereby jeopardizing their health and welfare, or in other
circumstances where action must be taken to ensure an individual's
health and welfare. Accordingly, in Sec. 441.458, we propose to permit
States to determine the conditions under which an individual may be
involuntarily disenrolled from the self-directed PAS State plan option.
We also note that we propose that we approve these conditions, and plan
to do so as part of the review of the State plan amendment to provide
self-directed PAS.
Again, we want to be assured that individuals continue to receive
the services for which they are eligible and that their health and
welfare are maintained. Accordingly, we would also propose to require
that States specify in the State plan the safeguards that will be in
place to ensure continuity of services during the transition from self-
directed services. In order to effectuate a prompt and efficient
transition, we would expect that any needed revisions to the service
plan would be made promptly and that participants are quickly linked
with alternate service providers for a seamless delivery of services.
Section 441.460 Participant Living Arrangements
Section 1915(j)(1) of the Act states that self-directed PAS cannot
be made available to individuals who reside in a home or property that
is owned, operated, or controlled by a provider of services, who is not
related to the individual by blood or marriage. We are proposing to
reflect the statutory requirement in Sec. 441.460(a). We note programs
that have successfully provided the self-directed care option have
typically provided it to individuals who live in homes of their own or
in the homes of their families. We believe successfully directing one's
own care may become less feasible when individuals receive services and
reside in large, provider-owned, operated or controlled residential
living arrangements. For example, if the residential facility also
provides and receives payment for the provision of personal care and
related services, it may prohibit the self-directed service delivery
option for fear of duplication of services. We are also proposing in
Sec. 441.460(b) to allow States to specify additional restrictions on
participant living arrangements, if they have been approved by CMS. We
further note that we believe this limitation should be applied to
individuals residing in assisted living facilities, as we anticipate
that the provider would both control the housing and be expected to
provide the PAS. However, we do not believe this limitation would apply
to situations in which the individual resides in the home of someone
whom they wish to employ under the self-directed PAS option. We invite
comment on our proposal as well as on other situations to which this
limitation should apply.
Section 441.462 Statewideness, Comparability, and Limitations on Number
Served
Section 1915(j)(3) of the Act permits a State to provide self-
directed PAS without regard to the requirements for statewideness
(section 1902(a)(1) of the Act), comparability of services or the
number of individuals served (section 1902(a)(10)(B) of the Act). In
Sec. 441.462, we propose to reflect section 1915(j)(3) of the Act.
However, we also wish to note below our understanding of the extent to
which these provisions provide flexibilities in the State plan PAS
option.
1. Geographic Limitations
Under this new State plan option, States are not bound by the
``statewideness'' requirement of section 1902(a)(1) of the Act. (The
statewideness requirement of section 1902(a)(1) of the Act provides, in
part, that the provisions of a State plan be in effect in all political
subdivisions of the State.) Therefore, consistent with the statute, we
propose in Sec. 441.462 to permit States to limit the provision of
self-directed PAS to any defined location of the State (that is, city,
county, community, etc.).
We note that the exception to the statewideness requirement applies
only to the provision of self-directed PAS under section 1915(j) of the
Act. The statewideness requirement of section 1902(a)(1) of the Act
continues to apply to all other Medicaid services for which an
individual may be eligible, unless those services are subject to their
own statewideness exception. In other words, the State cannot
geographically limit other services. Receipt of State plan PAS does not
in any way alter an individual's eligibility to receive any other
service under the State plan.
2. Comparability
Under this State plan option, the statute permits a State to
provide self-directed PAS to individuals without regard to the
``comparability'' provision in section 1902(a)(10)(B) of the Act. Thus,
a State can limit the populations eligible to receive these services.
(The ``comparability'' provision of section 1902(a)(10)(B) of the Act
generally requires States to make Medicaid services available in the
same amount, duration, and scope to one group of categorically needy
individuals as it offers to another group of categorically needy
individuals. The comparability provision also requires that the
Medicaid services available to any individual in a categorically needy
group are not less in amount, duration, and scope than those Medicaid
services available to an individual in a medically needy group).
Section 1915(j)(3) of the Act thus permits States to offer self-
directed PAS to certain populations, such as those with developmental
disabilities, physical disabilities or aged.
As with the statewideness exception, we note that the exception to
the comparability requirement applies only to the provision of self-
directed PAS under section 1915(j) of the Act. For all other Medicaid
services for which an individual may be eligible, the comparability
requirements of section 1902(a)(10)(B) of the Act continue to apply,
unless those services are subject to their own comparability exception.
In other words, receipt of self-directed PAS State plan does not in any
way alter an individual's eligibility to receive any other service
under the State plan.
3. Limitations on Number of People Served
The statute also permits a State to limit the number of persons
served under this State plan option. This means that the State may
limit the number of individuals receiving self-directed PAS. For
example, States could offer self-directed PAS to only 150 individuals.
Section 441.464 State Assurances
Section 1915(j)(2) of the Act requires States that elect this
option to assure the appropriate protection of Medicaid recipients. The
statute does not permit us to approve a program that does not provide
certain specified assurances. Specifically, section 1915(j)(2) of the
Act requires States to assure the Secretary of the following:
[[Page 3552]]
1. Necessary Safeguards
States must assure that necessary safeguards have been taken to
protect the health and welfare of individuals furnished services under
this program and to assure the financial accountability for funds
expended for self-directed services. In proposed Sec. 441.464(a), we
reflect this general requirement. More specifically, in proposed Sec.
441.464(a)(1), we would require that safeguards must prevent the
premature depletion of the participant directed budget as well as
identify potential service delivery problems that might be associated
with budget underutilization. We believe it is important that States
have a system to oversee the expenditures being made by participants.
Premature depletion of the funds in a budget could signal a health
crisis which would require the State to immediately determine the
health status of a participant and conduct a new assessment of the
participant's needs. It could also signal misuse of the funds, for
which the State would need to take corrective action. The corrective
action could be the provision of additional counseling and training on
how to manage the budget, or recoupment of the misspent funds. In
contrast, under-utilization of the funds could signal a problem with
the provision of services, or the lack of understanding of how the
funds may be used to purchase PAS and supports.
We propose, in Sec. 441.464(a)(2), a minimum list of safeguards
that must be provided, but States would have the ability to implement
additional safeguards to protect health and welfare and to prevent
premature depletion of the participant-directed budget. Our experience
with self-direction indicated that, at a minimum, a certain level of
oversight by the State is necessary to help flag potential issues,
particularly as to budget issues. The proposed list is based, in part,
on this experience. We believe that the proposed list represents
reasonable activities that a State should have in place so that any
health or other problems associated with use of the budgeted funds will
be brought to the attention of a case manager, support broker,
financial management entity, or other person with oversight
responsibilities. In proposed Sec. 441.464(a)(3) we would require that
safeguards must be designed so that budget problems are identified on a
timely basis so that corrective action may be taken, if necessary, in
order to protect health and welfare and ensure financial
accountability.
2. Evaluation of Need
States must assure the performance of an evaluation of the need for
personal care under the State plan or personal services under a section
1915(c) home and community-based services waiver program. In addition,
section 1915(j)(2)(B) of the Act states that those subject to the
evaluation of need are individuals who: (1) Are entitled to medical
assistance for personal care services under the State plan, or receive
home and community-based services under a section 1915(c) waiver; (2)
may require self-directed PAS; and (3) may be eligible for self-
directed PAS. We would reflect these statutory requirements in proposed
Sec. 441.464(b).
3. Notification of Feasible Alternatives
Individuals likely to require personal care under the State plan,
or home and community-based services under a section 1915(c) waiver
program, are informed of feasible alternatives, if available under the
State's self-directed PAS State plan option, at the choice of such
individuals, to the provision of personal care services under the State
plan, or personal assistance services under a section 1915(c) home and
community-based services waiver program.
With the implementation of this new State plan option, there could
be multiple programs offering individuals opportunities to receive
their services through different service delivery mechanisms. We
believe it is important that individuals be made aware, before
enrolling in a program, of feasible alternatives for which they may be
eligible and the requirements of all self-directed and non-self-
directed programs operating within a State. We have historically
required that participation in a self-directed program be voluntary and
informed in order to ensure that participants'' choice of the self-
directed model of service delivery is meaningful. To reflect both the
statutory requirement and our longstanding policy, we propose in Sec.
441.464(c)(1), that individuals receive information about self-
direction opportunities that is sufficient to inform decision-making
about the election of self-direction and provided on a timely basis to
individuals or their representatives. The information given to
individuals must minimally include the elements of self-direction
compared to non-self-directed PAS, self-direction responsibilities and
potential liabilities, their choice to receive PAS under a section
1915(c) waiver program, if applicable, and the option, if available, to
receive and manage the cash amount of their individual budget
allocation. We also propose to require a State, at Sec. 441.464(c)(2),
to inform individuals about when and how the information is provided.
4. Support System
Section 1915(j)(2)(D) of the Act requires States to provide a
support system to ensure that participants in the self-directed PAS
State plan option are appropriately assessed and counseled before
enrollment and are able to manage their budgets. Participants may also
request additional counseling and management support during
participation in the self-directed PAS option in an effort to address
any difficulties they may experience.
Based on our experience with self-direction programs, we are aware
that individuals of different ages and with different abilities and
disabilities, will desire to self-direct their PAS. In consideration of
the potential differences in abilities to self-direct services, we have
long required that States offer participants a support system that
includes information about self-direction, as well as any counseling,
training and assistance that may be needed or desired to effectively
manage their services and budgets. We propose to reflect both the
statutory requirement and our long-standing policy at Sec. 441.464(d).
While we do not prescribe the way States are to design their support
system in order to allow flexibility, based on our experience, we
include in the proposed regulation a minimum list of activities for
which individuals may need information, counseling, training and/or
assistance, but States may offer supports for additional activities.
Generally, the activities requiring support include participant rights
information and how the self-directed model of service delivery
operates. For example, the list includes providing important
beneficiary rights and protections such as freedom of choice of
providers, information about the grievance process and how participants
would recognize and report critical incidents. In order to convey all
the necessary information to individuals, we understand some States
have developed a ``consumer training manual'' and/or an orientation and
training program that includes necessary information about self-
direction, person-centered planning, the services that may be self-
directed, the roles and responsibilities of participants, providers,
supports brokers/counselors and financial management service entities,
as well as a host of other information about managing and directing the
services and
[[Page 3553]]
supports identified in the service plan and budget. We encourage States
to have such a manual or an orientation and training program in place
because it will give clear guidance to the involved and interested
parties in the self-directed PAS State plan option.
We also realize that as self-direction assumes a level of
independence and the ability of individuals to make decisions and
choices, the extent to which individuals use the information and
assistance may vary with their abilities and preferences. Individuals
may elect whether and to what extent they will avail themselves of the
support system, although States must require individuals not
participating in the cash option to utilize financial management
services. However, we do recognize that situations could arise in which
individuals experience episodic difficulty in effectively managing and
directing their PAS services and budgets. It has been our experience
with self-direction waiver and demonstration programs that States have
chosen to increase the level of support an individual may temporarily
need and to offer additional information, counseling, training or
assistance that may be needed and desired by individuals to overcome
the difficulty. States have found that by flexibly providing ongoing
support, success in self-directing services can usually be attained.
Based on these States'' experiences, we would require at proposed
Sec. 441.464(d)(3), that States would have information, counseling,
training or assistance available, including financial management
services, on an ongoing basis to participants at their request or when
the State has determined that the participant is not effectively
managing the services identified in the service plan or budget.
However, to ensure that participants continue to receive needed
services, we are also proposing in Sec. 441.464(d)(4), that if, after
additional information, counseling, training or assistance is provided,
the situation has not improved, States may mandate additional
assistance or may initiate an involuntary disenrollment in accordance
with Sec. 441.458.
5. Annual Report and Evaluation of Impact
Section 1915(j)(2)(E) of the Act requires that the State provide to
the Secretary an annual report reflecting the number of individuals
served under the State plan option and total expenditures on their
behalf. This section also requires that the State provide an evaluation
of the overall impact of the self-directed PAS option on participants''
health and welfare, in comparison to that of non-participants, every 3
years.
We propose to include these requirements in the regulations at
Sec. 441.464(e) and (f). We plan to issue further guidance on the
requirements and structure of the annual report, and we invite comments
on other information that we should consider in the development of this
guidance. We also plan to issue further guidance regarding expected
requirements and implementation of the evaluation component. We also
invite comment on the structure of this evaluation. For purposes of
this evaluation requirement, the comparison group of ``non-
participants'' should be individuals receiving PAS that are not self-
directed.
Section 441.466 Assessment of Need
Section 1915(j)(5)(B) of the Act requires that States conduct an
assessment of participants' needs, strengths, and preferences for self-
directed PAS. We propose to implement this requirement at Sec.
441.466. An assessment of an individual's needs, strengths and
preferences is crucial because it forms the basis for the
identification of the needed services and supports that will be
authorized in the individual's subsequent service plan and budget. It
is also important to identify an individual's strengths and preferences
that will enable self-direction of PAS. The assessment should include a
determination of whether there are any persons available to support the
individual, including family members. These persons may be able to
provide unpaid personal assistance, or fulfill more formal roles such
as acting in the capacity of a paid provider of PAS or as an
individual's representative. We do not prescribe the assessment tool to
be used by States, but we expect that the assessment will be
sufficiently comprehensive to support the determination that an
individual would require personal care services under the State plan or
personal assistance services under a section 1915(c) waiver program and
the development of the individual's subsequent service plan and budget.
Accordingly, we reflect this understanding that while the format of the
assessment is within the State's discretion, we expect the assessment
to be comprehensive and minimally meet the statutory requirement. We
propose that it include information about an individual's health
condition, personal goals and preferences for the provision of
services, functional limitations, age, school, employment, household,
and other factors that are relevant to the authorization and provision
of services, and support the finding for need of PAS and development of
the service plan and budget.
Section 441.468 Service Plan Elements
Section 1915(j)(5)(C) of the Act requires States to develop and
approve a service plan for each participant that includes the services
and supports for such services, based on the assessment of need through
a person-centered process. Section 1915(j)(5)(C) of the Act also
requires that the service-planning process build on the participant's
capacity to engage in activities that promote community life and that
respects the participant's preferences, choices, and abilities, and
must involve families, friends, and professionals in the planning or
delivery of services or supports as desired or required by the
participant. We propose to reflect these requirements at Sec. 441.468.
Specifically, at proposed Sec. 441.468(a), we list those service plan
elements we have found to be minimally necessary in developing a
service plan that adequately describes the services to be furnished. We
also propose, as explained previously in our Definitions section, that
we believe the service plan includes the individualized backup plan.
Furthermore, based on our experience with States' self-direction
waivers and demonstrations, we are aware that States implement the
person-centered planning process differently. Some States interpret the
process to be simply focused on the participant's needs, and do not
allow participants to also direct the process. Others allow the process
to be person-directed as well as person-centered. We propose to
require, at Sec. 441.468(b), that the process must be both person-
centered and directed because we believe that a person-centered and
directed service planning process will ensure that the resultant
service plan actively engages a participant, accurately reflects a
participant's abilities, preferences, and choices, and better meets the
underlying purpose of the self-directed PAS option. Therefore, we would
propose at Sec. 441.468(b)(1) that each participant's preferences,
choices and abilities are identified and strategies to address those
preferences, choices and abilities are included in the service plan. We
would also propose at Sec. 441.468(b)(2) that the participant is
permitted to exercise choice and control over services and supports
discussed in the plan. Finally, we would propose at Sec. 441.468(b)(3)
that risks that may pose harm to the participant are assessed and
planned for. For example, we would expect that the assessment would
identify potential risks to the
[[Page 3554]]
participant. The participant, or the participant's representative, if
any, together with the persons designated by the State to develop the
service plan, and others from whom the participant may seek guidance,
would discuss a plan for how any potential risks may be mitigated or
eliminated. The resultant plan is the individualized backup plan and
would be included in the service plan.
We would also propose at Sec. 441.468(c) that States have in place
policies and procedures associated with service plan development. In
Sec. 441.468(c)(1) through (c)(7), we propose a minimum list of
policies and procedures that we believe are necessary to ensure the
proper administration and development of the service plan. These
include that the participant has the opportunity to engage in and
direct the process to the extent desired, the participant has the
opportunity to involve family, friends, and professionals as desired or
required, the planning process is timely, the participant's needs are
assessed and services meet the needs, the responsibilities for service
plan development are identified, the qualifications of the individuals
who are responsible for service plan development are reflective of the
nature of the program's target population(s) and that service plans be
reviewed annually, or whenever necessary due to a change in the
participant's needs or health status.
In this way, the service plan would continuously address all of the
participant's assessed needs and goals, including health and safety
factors, and would be updated to add or delete services or modify the
amount and frequency of services.
We also propose to require, at Sec. 441.468(d), that safeguards be
established when an entity that provides other State Plan services is
responsible for service plan development to ensure that the service
provider's role in the planning process is fully disclosed to the
participant and controls are in place to avoid any possible conflict of
interest. Based on our review of the demonstrations and 1915(c) waiver
programs, we are aware that States sometimes choose to delegate the
service planning function to an entity that provides other State Plan
services. In order to ensure free choice of providers, we propose to
add this beneficiary protection to the regulation.
We also propose to require that approval of the service plan
conveys authority to the participant to perform, at a minimum, the
tasks listed in Sec. 441.468(e), such as recruiting, hiring, firing,
supervising and managing workers. It is the approval of the service
plan by the State that authorizes the individual to undertake these
activities as part of self-directed service delivery. The service plan
must encompass both the general decision-making authority that a
participant has and outline the individualized services and supports to
address the participant's needs, abilities, preferences and choices.
Section 441.470 Service Budget Elements
Section 1915(j)(5)(D) of the Act requires the establishment of a
budget for the provision of PAS and sets forth certain requirements for
the service budget. Specifically, this includes that the budget is
developed and approved by the State based on the assessment of need and
service plan. We propose to reflect this requirement in Sec. 441.470
and also propose to require that States inform participants of the
specific dollar amount that may be used for their services and supports
so they can properly develop a budget for how they will purchase their
services and supports. Similarly, we propose to require that the
specific dollar amount that may be used is indicated in the budget so
there is no question about the amount available to the participant. We
believe these requirements are necessary because it is important for
participants to have sufficient and clear information to allow them to
adequately plan for how they will use the funds to secure their needed
services and supports.
Section 1915(j)(5)(D) of the Act also requires that the budget not
restrict access to other medically necessary care and services
furnished under the State plan and approved by the State but not
included in the budget and sets forth the requirements for determining
the budget. We address these statutory requirements at proposed Sec.
441.472. Based on our experience with the self-direction waivers and
demonstrations, we learned that participants benefited from the
flexibility to be able to shift funds among authorized services within
the total amount of the budget without prior review and approval. To
require the State's review and approval of each budget modification
would be administratively untenable and would run counter to the
philosophy of self-direction. Therefore, we propose to require at Sec.
441.470(c) that the State have procedures in place that govern how
participants may flexibly adjust their budgets. The procedures must
minimally include how the participant may freely make changes to the
budget; the circumstances that may require prior approval before a
budget adjustment is made, for example, purchases above a certain
dollar amount; and the circumstances that may also require a
modification to the participant's service plan.
Section 1915(j)(4)(B)(ii) of the Act allows States, at their
option, to permit individuals to use their budget to acquire items that
increase independence or substitute for human assistance, to the extent
that expenditures would otherwise be made for the human assistance.
Based on our experience, we learned that participants benefited from
this option and were able to purchase items that allowed them greater
independence, such as an accessibility ramp, or that substituted for
human assistance, such as a microwave oven. The States that offered
this option required that the items to be purchased related to a need
identified in the service plan.
Some of these states also limited participants' purchases to a list
of allowable items for which no prior approval was necessary. Still
other States required prior approval for all items, while some others
provided a list of allowable items and required prior approval for
other items not on the list. In addition, each State developed
procedures that governed how participants could save an amount of their
monthly budget to purchase these items and how and at what intervals
the State would recoup funds that were not spent according to the
purchase plan.
Accordingly, if a State has elected this option, we propose to
require at Sec. 441.470(d), that the State have procedures that govern
how a person may put aside or reserve funds to purchase items that
increase independence or substitute for human assistance. These items
could include additional supports, goods, equipment, or supplies, and
the State should indicate if prior approval is required. As stated
above, participants benefited from this option and the ability to
reserve funds to purchase these items likewise proved beneficial to the
participants. Accordingly, we believe it is worthwhile to continue this
option under this State plan option.
We also recognize that some of the ``Cash and Counseling'' programs
allowed participants to use a small amount of their budget to purchase
items not otherwise delineated in the budget or earmarked for savings.
For example, participants used this discretionary amount to purchase or
supplement needed items or services not otherwise covered by Medicaid,
such as non-Medicaid covered prescription drugs or transportation to a
doctor's appointment. States typically set a dollar limit on the amount
of the
[[Page 3555]]
discretionary funds and participants were required to account for the
expenditures, but not necessarily retain receipts for the discretionary
purchases. Based on the success of this practice, we propose, at Sec.
441.470(e), to permit participants to use a small amount of their
budget to purchase items not otherwise delineated in the budget or
earmarked for savings. We anticipate that any budget methodology
employed by the State and the participant would take this option into
consideration.
Lastly, just as persons who receive traditional services have the
ability to grieve a denial or reduction of benefits, we think it is
important to ensure that participants in the self-directed PAS State
plan option have an opportunity to request a fair hearing if their
request for a budget adjustment is denied or the amount of the budget
is reduced. Accordingly, we propose to add the opportunity for a fair
hearing, as provided in Sec. 441.300, in the regulation at Sec.
441.470(f).
Section 441.472 Budget Methodology
Section 1915(j)(5)(D) of the Act also sets forth certain
requirements concerning the budget methodology. Underlying the
requirements are the concepts that the methodology used to develop the
service budget must be reasonable and fairly applied to all
participants. Specifically, the statute requires that the methodology
use valid, reliable cost data, is open to public inspection, and
includes a calculation of the expected cost of such services if those
services were not self-directed.
We are not proposing to prescribe the methodology States should use
to develop a service budget. We recognize that some States may wish to
use a prospective method, a retrospective method, or a combination of
methods. However, we propose to require in the regulation at Sec.
441.472, that whatever methodology is used, it is objective and
evidence-based, using valid, reliable cost data, that is, the method is
based on an analysis of historical costs and utilization and other
factors that are likely to affect costs. We would also propose to
require that it is applied consistently to participants and that the
methodology is open to public inspection. We also propose to require
that the State's method includes a calculation of the expected cost of
the self-directed PAS and supports, if these services and supports were
not self-directed. This service budget amount is the cap on the amount
of funds available to an individual with which to purchase self-
directed PAS and supports.
We recognize in Sec. 441.472(a)(5) that States may place monetary
or budgetary limits on self-directed services and supports. Therefore,
if a State does so, we would require that the State have a process in
place that describes the limits and the basis for the limits, and any
adjustments that will be allowed and the basis for the adjustments,
such as participant health and welfare.
Additionally, we propose to require certain beneficiary safeguards
in light of these possible limitations. First, we propose that States
have procedures to safeguard participants when the budgeted service
amount is insufficient to meet a participant's needs. Second, we
propose that States have a method of notifying participants of the
amount of any limit that applies to a participant's self-directed PAS
and supports. Third, we propose that the budget not restrict access to
other medically necessary care and services furnished under the plan
and approved by the State but not included in the budget. We note this
proposal not only reflects the statutory requirement at section
1915(j)(5)(D) of the Act, but makes clear that the only limitation
would be for self-directed PAS.
Section 441.474 Quality Assurance and Improvement Plan
Section 1915(j)(5)(E) of the Act requires States to provide
appropriate quality assurance techniques to establish and implement the
PAS service plan and budget. Such techniques must recognize the roles
and responsibilities in obtaining services in a self-directed manner
and assure the appropriateness of such plan and budget based upon the
participant's resources and capabilities. For approximately 30 years,
we have witnessed an increasing number of Medicaid recipients who want
to move into or remain in the community in order to receive community-
based care and services. Simultaneously, we have seen the growth in the
number of individuals who want to self-direct their community-based
care and services. States face the challenge of how to ensure each
participant's health and welfare while also respecting individual
autonomy and choice. We believe that this challenge can be met with an
effective quality assurance and improvement plan that incorporates
performance of discovery, remediation, and quality improvement
activities and includes system performance measures, outcome measures,
and satisfaction measures. We propose to reflect such measures and
quality assurance and improvement plan components in the regulation at
Sec. 441.474(a) and (b) and expect the State to monitor and evaluate
these measures.
We will be reviewing the State's description of the quality
assurance and improvement plan when we review the State's request to
use the self-directed PAS option. The State Medicaid agency must be
involved in planning the quality assurance activities and measures, and
the discovery, remediation, and improvement activities, but does not
have to execute every activity. However, the State Medicaid Agency must
retain the overall oversight and responsibility for the quality
assurance plan.
Section 441.476 Risk Management
Section 1915(j)(5)(E) of the Act also requires States to provide
appropriate risk management techniques to establish and implement the
PAS service plans and budgets. As with quality assurance, these
techniques must recognize the roles and responsibilities in obtaining
services in a self-directed manner and assure the appropriateness of
such plan and budget based upon the participant's resources and
capabilities. We have learned that self-directed care has empowered
individuals to assert their choices and to want to exercise more
control over their care and services. As individuals experience greater
choice and control, they may also desire to assume more of the
responsibilities and risks associated with the provision of their PAS.
How much risk an individual is willing and able to assume is a matter
of discussion and negotiation among the persons designated by the State
to develop the service plan, the participant, the participant's
representative, if any, and others from whom the participant may seek
guidance. In order to facilitate appropriate risk management, we
propose to include certain requirements at Sec. 441.476.
First, at Sec. 441.476(a), we propose to require that the State
specify the risk assessment methods it uses to identify potential risks
to the participant. We do not prescribe an assessment method States
must use but note that a proper assessment of the potential risks
should include several perspectives, including any relevant clinical
perspective, and involve those responsible for development of the
service plan, the participant, the participant's representative, if
any, and others from whom the participant may seek guidance.
Second, we also propose, at Sec. 441.476(b), that the State
specify any tools or instruments it uses to mitigate identified risks.
Again, we do not propose to prescribe the tools or
[[Page 3556]]
instruments that States must use because States should have the
flexibility necessary to use the instruments or tools they have found
best meet the needs of the participants. Examples of risk management
tools or instruments might include criminal and worker background
checks; job descriptions that clearly set forth the roles and
responsibilities of participants, workers, representatives, and all
others involved with supporting the participant; and the use of
individual risk agreements that permit the participant to acknowledge
and accept the responsibility for addressing certain types of risks.
Currently, States have the option, at their own expense, to provide
criminal background checks for individuals who are self-directing their
services. We invite comment on whether the provision of criminal
background checks should be mandatory under this self-directed PAS
State plan option.
Third, at Sec. 441.476(c), we propose to require that the State
ensure that each participant's service plan includes the risks that the
participant is willing and able to assume, and the plan for how the
identified risks will be mitigated. In this manner, the service plan
adequately includes and documents how these identified risks are to be
handled. Finally, at Sec. 441.476(d), we would require that the State
ensure that the risk management plan is the result of discussion and
negotiation among the persons designated by the State to develop the
service plan, the participant, the participant's representative, if
any, and others from whom the participant may seek guidance. The input
of all the parties interested in the participant's PAS service plan
would thus be included and ensure that the service plan and budget
reflect the participant's resources and capabilities.
Section 441.478 Qualifications of Providers of Personal Assistance
Section 1915(j)(4)(B) of the Act permits States to elect to allow
participants to choose any individual capable of providing the assigned
tasks, including legally liable relatives, as paid providers of
services. We reflect these requirements in the proposed regulation at
Sec. 441.478(a). We are not proposing to set a minimum age requirement
in the regulation and invite comment on whether an age requirement
should be added, and if so, under what circumstances. At this point, we
believe that an age requirement would not allow States the flexibility
in setting their own standards should they choose this option. For
example, hiring a 16-year-old to perform some homemaker tasks may be
appropriate, whereas an adult may be better suited to provide more
technically difficult or intimate personal care services. We expect the
State to consider these issues prior to making a decision to elect this
option.
However, we propose, at Sec. 441.478(b), that participants retain
the right to train their workers in the specific areas of personal
assistance needed by the participant and to perform the needed
assistance in a manner that comports with the participant's personal,
cultural, and/or religious preferences. We have learned, through our
experience with the self-direction waiver and demonstration programs,
that the training for workers furnishing self-directed PAS must be
tailored to each individual's preferences, as well as their needs. In
this way, workers benefit from clear instructions about how to
effectively and appropriately deliver the self-directed PAS, and any
potential dissatisfaction with the way services are being delivered can
be averted. We further propose, at Sec. 441.478(c), that participants
retain the right to establish additional staff qualifications based on
their needs and preferences. Again, we believe that the participant is
in the best position to set forth the particular staff qualifications
needed to meet the particular preferences of the participant. For
example, if the participant communicates best using American Sign
Language (ASL), the participant may require the worker to be able to
communicate using ASL.
Section 441.480 Use of a Representative
Section 1915(j)(5)(A) of the Act indicates the types of participant
representatives in the self-directed PAS option. Specifically, the
statute includes as representatives a parent or guardian if the
participant is a minor child, or an individual recognized by State law
to act on behalf of a participant who is an incapacitated adult. We
propose to include these requirements at Sec. 441.480(a)(1) and
(a)(2).
In addition to the statutory listings, we believe that other
representatives should be permitted by the State. The role of the
representative is to assist individuals in making decisions with
respect to the planning, development, management and direction of their
service plans and budgets. We encourage States to recognize and permit
other representative relationships, so that participants can exercise
greater flexibility in their choice of who will assist them with their
decisions.
Furthermore, based on the experience of States with self-direction
programs, we believe it is appropriate for States to have the option to
mandate the use of a representative if the participant has
demonstrated, after additional counseling, information, training, or
assistance, the inability to self-direct PAS. We specify this
requirement in the proposed regulation at Sec. 441.480(a)(5), and also
propose to require that CMS approve in the State plan amendment a
State's criteria for situations that would result in the State
mandating the use of a representative. Examples of these criteria could
include a participant not being able to carry out the responsibilities
for self-direction after the provision of additional counseling,
information, training, or assistance, or because an individual's health
or welfare requires the assistance of a representative.
Finally, to protect against conflict of interest, we propose, at
Sec. 441.480(b), to prohibit a participant's representative from also
serving as a paid provider of services to the participant. Based upon
the experiences of the States participating in the original ``Cash and
Counseling'' demonstration, we learned that it is important to include
this limitation in the self-directed PAS option in order to avoid the
situation of a representative overseeing or making decisions that
directly impact them, for example, ``approving'' their own rate of pay,
their own timesheets, and the like. Accordingly, in order to promote
participant health and welfare and program integrity, and to ensure
that participants actually receive their authorized PAS, we propose to
include this necessary protection in the proposed regulation.
Section 441.482 Permissible Purchases
Section 1915(j)(4)(B)(ii) of the Act permits individuals, at the
State's option, to use the funds allocated in their budgets to acquire
items that increase their independence or substitute for human
assistance, to the extent that expenditures would otherwise be made for
that human assistance. We propose to implement this provision in the
proposed regulation at Sec. 441.482(a). The statute specifically gives
the examples of a microwave oven and accessibility ramp because these
two items could conceivably increase independence or substitute for
human assistance.
Moreover, experience under the section 1115 and section 1915 (c) of
the Act self-direction and Independence Plus programs indicated that
when recipients are given the ability to purchase items that increased
their
[[Page 3557]]
independence or substituted for human assistance, they do so prudently
and effectively. However, we propose, at Sec. 441.482(b), that these
purchases must address an assessed participant need included in the
service plan, in order to ensure that the item, and insofar as that
expenditure would have otherwise been made using human assistance, is
medically necessary and to promote program integrity. We also note that
we have previously proposed in Sec. 441.470(d) that the State set
forth a procedure that governs how such items are to be included in the
service budget.
Section 441.484 Financial Management Services
Under section 1915(j)(6) of the Act, States may employ a financial
management entity to make payments to providers, track costs, and make
reports under the self-directed PAS State plan option. The financial
management provisions are noted in the proposed regulation at Sec.
441.484. The statute lists very broad responsibilities for a financial
management entity to perform. In the context of the self-directed PAS
option, these broad statutory categories must be considered and linked
to specific duties. For example, financial management services are used
for two purposes: (a) To address Federal, State, and local employment
tax, labor and workers'' compensation insurance rules, and other
requirements that apply when the participant functions as the employer
of workers, and (b) to make financial transactions on behalf of the
participant, such as preparing paychecks for workers and paying
invoices for goods and services identified in the participant's service
plan. These responsibilities can be generally noted as making payments
and tracking costs.
We first note there are different Internal Revenue Service (IRS)
requirements that must be adhered to, depending on how financial
management services are provided. For instance, financial management
services provided directly by the State, or by a State's reporting or
subagent through its fiscal intermediary, must follow section 3504 of
the IRS Code and Revenue Procedure 80-4 and Notice 2003-70. Financial
management services provided through vendor organizations must follow
Section 3504 of the IRS Code and Revenue Procedure 70-6. When private
entities furnish financial management services, the procurement method
must meet requirements set forth in 45 CFR 74.40 through section 74.48.
Accordingly, we propose, at Sec. 441.484(a)(1) and (a)(2), the
arrangement options available to States for offering financial
management services, and specify proposed requirements that must be
followed for each option (barring participants who perform these
functions themselves).
Furthermore, to ensure appropriate safeguards and recipient
protections, we propose to require States to provide oversight of
financial management services. Without this oversight there is a risk
of inadequate delivery of financial management such as system
deficiencies, failure to pay workers timely, and errors in complying
with IRS requirements. When utilized, the financial management service
is critical to the success of the self-directed PAS State plan option.
Specifically, at Sec. 441.484(b), we are proposing that States must
perform the following oversight activities, regardless of how financial
management services are provided: Monitoring and assessing the
performance of the financial management entity, including assuring the
integrity of financial transactions they perform; designating a State
entity or entities responsible for this monitoring; and determining how
frequently financial management entity performance will be assessed.
While we are not requiring specific oversight activities, examples of
State performance monitoring and assessment may include conducting
periodic audits of financial management entities, conducting
participant satisfaction surveys or other methods or procedures.
Also, as a further beneficiary safeguard, we propose, at Sec.
441.484(c), a list of the specific minimum functions that must be
provided by financial management entities as noted under the broad
statutory requirement (or by States directly, if no financial
management entities are utilized).
This list includes, but is not limited to, collecting and
processing timesheets of the participant's workers; processing payroll,
withholding, filing and payment of applicable Federal, State and local
employment-related taxes and insurance; maintaining a separate account
for each participant's budget; tracking and reporting disbursements and
balances of participant funds; processing and paying invoices for goods
and services approved in the service plan; and providing to
participants periodic reports of expenditures and the status of the
approved service budget. We believe these proposed functions represent,
at a minimum, the standard duties and responsibilities that a financial
management entity (or a State) would need to assume in assisting a
beneficiary in the self-directed State plan option.
Inherent in the statute is the ability of the State to retain the
responsibility of providing financial management entity functions. We
are aware that many States with self-direction programs do in fact
retain this responsibility. We expect a State to perform the same
functions as a financial management entity. We are proposing to
explicitly require the State to do such in the absence of utilizing a
financial management entity. The purpose of noting this expectation of
the States is to clarify to a participant that these services are
provided by the State. Accordingly, we propose at Sec. 441.482(d) that
States not employing a financial management entity must perform all
functions that would have been provided by the financial management
entity on behalf of all participants self-directing their PAS under
this new State plan option, except for participants taking advantage of
the cash option, as they directly perform those functions for
themselves.
Based on our review of self-directed programs, we are aware that
States may choose to allow participants to self-direct services under
the ``agency with choice'' model, which utilizes a co-employment
relationship between the participant and an agency. This agency could
be a traditional service provider or a financial management entity, and
acts as the employer of record of the PAS worker. If a State allows
this option, the financial management services must be separately
delineated from other services that the agency may provide in order
that the financial management services (FMS) are claimed appropriately.
Section 1915(j)(6) of the Act further states activities of the
financial management entity be matched by CMS at ``the administrative
rate established in Section 1903(a)'' of the Act. We are interpreting
this reference to apply specifically to section 1903(a)(7) of the Act,
which provides for a Federal Medical Assistance Percentage (FMAP) rate
of 50 percent for the ``amounts expended * * * found necessary by the
Secretary for the proper and efficient administration of the State
plan.'' We believe the DRA Conference Report language supports this
reading as it notes that payment for the activities of the financial
management entity will be reimbursed at the ``same rate as other
Medicaid administrative activities generally * * * percent.'' H.R.
Conf. Rep. No.362, (109th Cong. 301). We will also consider the State's
financial management activities to be general administrative activities
and likewise matched at 50 percent. Therefore, financial management
services, whether
[[Page 3558]]
provided by a financial management entity, the State, or by another
entity under ``agency with choice'' will be reimbursed under the 50
percent administrative rate under this new State plan option.
III. Response to Comments
Because of the large number of public comments we normally receive
on Federal Register documents, we are not able to acknowledge or
respond to them individually. We will consider all comments we receive
by the date and time specified in the DATES section of this preamble,
and, when we proceed with a final document, we will respond to the
comments in that document.
IV. Collection of Information Requirements
[If you choose to comment on issues in this section, please include
the caption ``COLLECTION OF INFORMATION REQUIREMENTS'' at the beginning
of your comments.]
Under the Paperwork Reduction Act of 1995, we are required to
provide 60-day notice in the Federal Register and solicit public
comment before a collection of information requirement is submitted to
the Office of Management and Budget (OMB) for review and approval. In
order to fairly evaluate whether an information collection should be
approved by OMB, section 3506(c)(2)(A) of the Paperwork Reduction Act
of 1995 requires that we solicit comment on the following issues:
The need for the information collection and its usefulness
in carrying out the proper functions of our agency.
The accuracy of our estimate of the information collection
burden.
The quality, utility, and clarity of the information to be
collected.
Recommendations to minimize the information collection
burden on the affected public, including automated collection
techniques.
We are soliciting public comment on each of these issues for the
following sections of this document that contain information collection
requirements (ICRs):
Section 441.454 Use of Cash
Section 441.454(d) requires States to make available a financial
management entity to a participant who has demonstrated, after
additional counseling, information, training, or assistance, that the
participant cannot effectively manage the cash option described in
paragraph (a) of this section.
The burden associated with this requirement is the time and effort
put forth by the State to counsel and to provide information, training,
and or assistance to participants. We believe that it would take a
State 1 hour per participant to provide this guidance. The total annual
burden of this requirement would vary according to the number of
participants in each State who are self-directing their PAS under this
State Plan option.
Section 441.456 Voluntary Disenrollment
Section 441.456(b) requires States to specify in the State plan the
safeguards that are in place to ensure continuity of services during
the transition from self-directed PAS.
The burden associated with this requirement is the time and effort
put forth by the State to revise its State plan to include the
safeguards. While the burden associated with this requirement is
subject to the PRA, the burden associated with the State plan amendment
is currently approved under OMB 0938-0933.
Section 441.458 Involuntary Disenrollment
Section 441.458(c) requires States to specify in the State plan the
safeguards that are in place to ensure continuity of services during
the transition from self-directed PAS.
The burden associated with this requirement is the time and effort
put forth by the State to revise its State plan to include the
safeguards. While the burden associated with this requirement is
subject to the PRA, the burden associated with the State plan amendment
is currently approved under OMB 0938-0933.
Section 441.464 State Assurances
Section 441.464(a) requires States to provide an assurance that
necessary safeguards have been taken to protect the health and welfare
of individuals furnished services under the program and to assure the
financial accountability for funds expended for self-directed services.
The burden associated with this requirement is the time and effort
it would take for each State to meet these conditions. To meet the
requirements in Sec. 441.464(a), we estimate it would take each State
80 hours to develop a system of safeguards that protects participants'
health and welfare and ensures financial accountability for funds
expended, and no further burden would be associated with this
requirement. We estimate the total maximum one-time burden for this
requirement to be 4,480 hours. (56 States x 80 hours = 4,480 hours)
Section 441.464(b) requires States to provide an assurance that
they will perform an evaluation of the need for personal care under the
State plan or personal services under a section 1915(c) home and
community-based services waiver program. The burden associated with
this requirement is the time and effort it would take for each State to
meet this condition. To meet the requirement in Sec. 441.464(b), we
estimate it would take a State 2 hours per participant to perform this
evaluation of need. The total annual burden of this requirement would
vary according to the number of participants in each State who are (1)
entitled to medical assistance for personal care services under the
State plan, or receive home and community-based services under a
section 1915(c) waiver program; (2) may require self-directed PAS; and
(3) may be eligible for self-directed PAS.
Section 441.464(c) requires States to provide an assurance that
individuals likely to require personal care under the State plan, or
home and community-based services under a section 1915(c) waiver
program, are informed of the feasible alternatives, if available, under
the State's self-directed PAS State plan option, at the choice of these
individuals, to the provision of personal care services under the State
plan or PAS under a section 1915(c) home and community-based services
waiver program. The burden associated with this requirement is the time
and effort it would take for each State to meet this condition. To meet
the requirement in Sec. 441.464(c), we estimate it would take a State
15 minutes per participant to inform individuals of feasible
alternatives. The total annual burden of this requirement would vary
according to the number of participants in each State who are likely to
require personal care under the State plan, or home and community-based
services under a section 1915(c) waiver program.
Section 441.464(d) requires States to provide a support system that
meets the following conditions:
(1) Appropriately assesses and counsels an individual before
enrollment.
(2) Provides appropriate information, counseling, training, and
assistance to ensure that a participant is able to manage the services
and budgets. The support activities must include at least the
following:
(i) Person-centered planning and how it is applied.
(ii) Information about the services available for self-direction.
(iii) Range and scope of individual choices and options.
(iv) Process for changing the service plan and service budget.
(v) Grievance process.
[[Page 3559]]
(vi) Risks and responsibilities of self-direction.
(vii) Freedom of choice of providers.
(viii) Individual rights.
(ix) Reassessment and review schedules.
(x) Defining goals, needs, and preferences.
(xi) Identifying and accessing services, supports, and resources.
(xii) Development of risk management agreements.
(xiii) Development of an individualized backup plan.
(xiv) Recognizing and reporting critical events.
(3) Offers additional information, counseling, training, or
assistance, including financial management services under either of the
following conditions:
(i) At the request of the participant for any reason.
(ii) When the State has determined the participant is not
effectively managing the services identified in the service plan or
budget.
The burden associated with this requirement is the time and effort
it would take for each State to meet these conditions. To meet the
requirements in Sec. 441.464(d)(1), we estimate it would take each
State 2 hours per participant. To meet the requirements in Sec.
441.464(d)(2), we estimate it would take each State 1 hour per
participant. To meet the requirements in Sec. 441.464(d)(3), we
estimate it would take each State 1 hour per participant. The total
annual burden of these requirements would vary according to the number
of participants in each State who are self-directing their PAS under
this State Plan option.
Section 441.464(e) requires the State to provide to CMS an annual
report on the number of individuals served and the total expenditures
on their behalf in the aggregate.
The annual burden associated with this requirement is the time and
effort it would take for each State to gather the necessary data and
provide an annual report to CMS. We estimate that it would take one
State no more than 25 hours to meet this requirement; therefore, the
total maximum annual burden is 1,400 hours. (56 States x 25 hours =
1,400 hours)
Section 441.464(f) requires the State to provide to CMS an
evaluation of the overall impact on the health and welfare of
participating individuals compared to non-participants every 3 years,
as determined by CMS.
The burden associated with this requirement is the time and effort
it would take for each State to provide such an evaluation to CMS. We
estimate that it would take one State 200 hours to prepare and submit
the evaluation to CMS every 3rd year; therefore, the total maximum
burden on that 3rd year would be 11,200 hours. (56 States x 200 hours =
11,200)
Section 441.468 Service Plan Elements
Section 441.468(b) requires a State to develop a service plan for
each program participant using a person-centered and directed planning
process to ensure the following:
(1) The identification of each program participant's preferences,
choices, and abilities, and strategies to address those preferences,
choices, and abilities.
(2) The option for the program participant to exercise choice and
control over services and supports discussed in the plan.
(3) Assessment of, and planning for avoiding, risks that may pose
harm to a participant.
The burden associated with this requirement is the time and effort
it would take for each State to meet these conditions. We estimate it
would take each State 3 hours per participant to meet this requirement.
The total annual burden of this requirement would vary according to the
number of participants in each State who are self-directing their PAS
under this State Plan option.
Section 441.468(d) states that when an entity that is permitted to
provide other State plan services is responsible for service plan
development, the State must describe the safeguards that are in place
to ensure that the service provider's role in the planning process is
fully disclosed to the participant and controls are in place to avoid
any possible conflict of interest.
The burden associated with this requirement is the time and effort
it would take for the State to fully disclose the required information.
We estimate that it would take one State 15 minutes per participant to
meet this requirement. The total annual burden of this requirement
would vary according to the number of participants in each State who
are self-directing their PAS under this State Plan option.
Section 441.468(e) requires that an approved self-directed service
plan conveys authority to the participant to perform, at a minimum, the
following tasks: Recruit and hire workers to provide self-directed
services, including specifying worker qualifications; fire workers;
supervise workers in the provision of self-directed services; manage
workers in the provision of self-directed services (determining worker
duties, scheduling workers, training workers in assigned tasks, and
evaluating workers' performance); determine the amount paid for a
service, support, or item; and review and approve provider invoices.
While this information collection is subject to the PRA, we believe
this requirement meets the requirements of 5 CFR 1320.3(b)(2), and as
such, the burden associated with this requirement is exempt from the
PRA.
Section 441.470 Service Budget Elements
Section 441.470 states that a service budget must be developed and
approved by the State based on the assessment of need and service plan
and must include the following:
(a) The specific dollar amount a participant may utilize for
services and supports.
(b) How the participant is informed of the amount of the service
budget before the service plan is finalized;
(c) The procedures for how the participant may adjust the budget,
including the following:
(1) How the participant may freely make changes to the budget.
(2) The circumstances, if any, that may require prior approval
before a budget adjustment is made.
(3) The circumstances, if any, that may require a change in the
service plan.
(d) The procedure(s) that governs how a person, at the election of
the State, may reserve funds to purchase items that increase
independence or substitute for human assistance including additional
goods, supports, services or supplies.
(e) The procedure(s) that governs how a person may use a
discretionary amount, if applicable, to purchase items not otherwise
delineated in the budget.
(f) How participants are afforded the opportunity to request a fair
hearing under Sec. 441.300 if a participant's request for a budget
adjustment is denied or the amount of the budget is reduced.
The burden associated with this requirement is the time and effort
put forth by the State to develop a service budget. We estimate it
would take a State 3 hours per participant to meet this requirement.
The total annual burden of this requirement would vary according to the
number of participants in each State who are self-directing their PAS
under this State Plan option.
Section 441.472 Budget Methodology
Section 441.472(b) requires a State to have procedures in place to
safeguard participants when the budgeted service amount is insufficient
to meet a participant's needs.
The burden associated with this requirement is the time and effort
it
[[Page 3560]]
would take for a State to develop its procedures on how to handle this.
We estimate that it would take one State 16 hours to develop these
procedures and no further burden would be associated with this
requirement. The one-time maximum burden associated with this
requirement is 896 hours. (56 States x 16 hours = 896 hours)
Section 441.472(c) requires a State to have a method of notifying
participants of the amount of any limit that applies to a participant's
self-directed PAS and supports.
The burden associated with this requirement is the time and effort
it would take for the State to provide this notification. We estimate
it would take one State 15 minutes per participant to meet this
requirement. The total annual burden of this requirement would vary
according to the number of participants in each State who are self-
directing their PAS under this State Plan option.
Section 441.474 Quality Assurance and Improvement Plan
Section 441.474(a) requires States to provide a quality assurance
and improvement plan that describes the State's system of how it would
conduct activities of discovery, remediation, and quality improvement
in order to learn of critical incidents or events that affect
participants, correct shortcomings, and pursue opportunities for
improvement; and
(b) The quality assurance and improvement plan shall also describe
the system performance measures, outcome measures, and satisfaction
measures that the State would use to monitor and evaluate the self-
directed State plan option.
The burden associated with this requirement is the time and effort
it would take for the State to customize its quality assurance and
improvement plan to the self-directed service delivery model. We
estimate that it would take one State 100 hours to customize its
quality assurance and improvement plan and no further burden would be
associated with this requirement. The one-time maximum burden
associated with this requirement is 5,600 hours. (56 States x 100 hours
= 5,600 hours)
Section 441.484 Financial Management Services
Section 441.484(a) proposes that States may choose to provide
financial management services to participants self-directing PAS, with
the exception of those participants utilizing the cash option who
directly perform those functions. Section 441.484(c) proposes to
require that the financial management entity provide functions
including, but not limited to, the following:
(1) Collect and process timesheets of the participant's workers.
(2) Process payroll, withholding, filing and payment of applicable
Federal, State and local employment-related taxes and insurance.
(3) Maintain a separate account for each participant's budget.
(4) Track and report disbursements and balances of participant
funds.
(5) Process and pay invoices for goods and services approved in the
service plan.
(6) Provide to participants periodic reports of expenditures and
the status of the approved service budget. Section 441.484(d) requires
States not utilizing a financial management entity must perform the
functions listed in paragraph (c) of this section on behalf of
participants self-directing PAS, with the exception of those
participants utilizing the cash option who directly perform those
functions.
The burden associated with this requirement is the time and effort
it would take for the financial management entity or State to develop
and perform the listed functions. We estimate it would take a financial
management entity or the State 320 hours to develop the financial
management system. Once the system was in place, the annual burden
associated with these functions would vary according to the number of
participants in each State who are self-directing their PAS under this
State Plan option. We estimate the maximum one-time burden on the
States to develop the financial management system to be 17,920 hours
during the first year. (56 States x 320 hours = 17,920)
Note: Annual burden in the following years will vary. We have no
data on how many financial management entities would be affected by
this requirement; therefore, we are unable to provide total annual
burden associated with financial management entities.
The total aggregate burden for the requirements in this proposed
rule that affect States annually is estimated to be 1,400 hours. The
total aggregate burden associated with one-time requirements on States
is estimated to be 28,896. The total aggregate burden associated with
the burden placed on States every 3rd year is estimated to be 11,200
hours.
Note: We are unable to provide aggregate burden totals for those
requirements affecting participants because burden will vary
according to the number of participants in each State who are self-
directing their PAS under this State Plan option. We are also unable
to provide aggregate burden for financial management entities
affected by Sec. 441.484(a).
If you comment on these information collection and record keeping
requirements, please mail copies directly to the following:
Centers for Medicare & Medicaid Services, Office of Strategic
Operations and Regulatory Affairs, Division of Regulations Development,
Attn.: Melissa Musotto, CMS-2229-P, Room C5-14-03, 7500 Security
Boulevard, Baltimore, MD 21244-1850.
Office of Information and Regulatory Affairs, Office of Management
and Budget, Room 10235, New Executive Office Building, Washington, DC
20503, Attn: Katherine Astrich, CMS Desk Officer, CMS-2229-P,
katherine_astrich@omb.eop.gov. Fax (202) 395-6974.
V. Regulatory Impact Statement
[If you choose to comment on issues in this section, please include
the caption ``REGULATORY IMPACT STATEMENT'' at the beginning of your
comments.]
A. Overall Impact
We have examined the impact of this rule as required by Executive
Order 12866 (September 1993, Regulatory Planning and Review), the
Regulatory Flexibility Act (RFA) (September 19, 1980, Pub. L. 96-354),
section 1102(b) of the Social Security Act, the Unfunded Mandates
Reform Act of 1995 (Pub. L. 104-4), and Executive Order 13132.
Executive Order 12866 directs agencies to assess all costs and benefits
of available regulatory alternatives and, if regulation is necessary,
to select regulatory approaches that maximize net benefits (including
potential economic, environmental, public health and safety effects,
distributive impacts, and equity). A regulatory impact analysis (RIA)
must be prepared for major rules with economically significant effects
($100 million or more in any 1 year). This rule does not reach the
economic threshold and thus is not considered a major rule.
The RFA requires agencies to analyze options for regulatory relief
of small businesses. For purposes of the RFA, small entities include
small businesses, nonprofit organizations, and small governmental
jurisdictions. Most hospitals and most other providers and suppliers
are small entities, either by nonprofit status or by having revenues of
$6.5 million to $31.5 million in any 1 year. Individuals and States are
not included in the definition of a small entity. We are not preparing
an analysis for the RFA because we have determined, and the Secretary
certifies,
[[Page 3561]]
that this rule would not have a significant economic impact on a
substantial number of small entities.
In addition, section 1102(b) of the Act requires us to prepare a
regulatory impact analysis if a rule may have a significant impact on
the operations of a substantial number of small rural hospitals. This
analysis must conform to the provisions of section 603 of the RFA. For
purposes of section 1102(b) of the Act, we define a small rural
hospital as a hospital that is located outside of a Core-Based
Statistical Area and has fewer than 100 beds. We are not preparing an
analysis for section 1102(b) of the Act because we have determined, and
the Secretary certifies, that this rule would not have a significant
impact on the operations of a substantial number of small rural
hospitals.
Section 202 of the Unfunded Mandates Reform Act of 1995 also
requires that agencies assess anticipated costs and benefits before
issuing any rule whose mandates require spending in any 1 year of $100
million in 1995 dollars, updated annually for inflation. That threshold
level is currently approximately $120 million. This rule would have no
consequential effect on State, local, or tribal governments or on the
private sector.
Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a proposed rule (and subsequent
final rule) that imposes substantial direct requirement costs on State
and local governments, preempts State law, or otherwise has Federalism
implications. Since this regulation would not impose any costs on State
or local governments, the requirements of E.O. 13132 are not
applicable.
B. Anticipated Effects
FFP will be available for self-directed PAS if the State elects to
offer this opportunity through the approved State plan. Since self-
direction is an alternative service delivery model, it is expected that
the impact on Medicaid spending would not be very large. The use of
self-directed PAS is estimated to cost a total of $225 million in FY
2008 to FY 2012, of which $127 million is Federal share.
In making this estimate, we considered that costs might increase
due to new covered expenses (such as microwave ovens or accessibility
ramps) as well as new applicants being attracted to the Medicaid
program, because of the permissibility of payments to relatives. Costs
could decrease because beneficiaries might require less help and less
expensive help. We also noted that some States have already implemented
self-directed programs under other Medicaid authorities and thus, in
those States, there would be little cost effect to the statute or this
new regulation. We first estimated that the projected impact of all our
proposals would amount to an overall 0.5 percent increase in personal
care service expenditures, if all States and Territories implemented
this self-direction PAS State plan option. We then accounted for a
partial starting year, a phase-in period and the fact that this is a
State plan option. Our final estimate is as noted in the table below.
Section 1915(j) Self-Directed Personal Assistance Services Program (Cash & Counseling)
[Dollars in millions]
----------------------------------------------------------------------------------------------------------------
FY 2008 FY 2009 FY 2010 FY 2011 FY 2012
----------------------------------------------------------------------------------------------------------------
Federal Cost........................................ 12 20 29 32 34
State Cost.......................................... 9 15 22 24 26
-----------------------------------------------------------
Total*.......................................... 22 35 51 56 61
----------------------------------------------------------------------------------------------------------------
* Amounts may not equal total due to rounding.
C. Alternatives Considered
In considering alternatives to the proposals presented in this
proposed rule, we considered the current practices under section 1115
demonstrations and section 1915(c) waiver programs that implemented
self-direction. In particular, we considered whether to allow States
the flexibility to offer the option of disbursing cash prospectively to
participants. We learned from the experience of the section 1115
demonstrations that participants were able to successfully manage the
funds in their budget and maintain financial accountability, with some
general guidance and oversight. In light of our desire to provide
flexibility to the beneficiaries and to better reflect the intent of
the PAS State plan option, we proposed this option.
We also considered the extent to which to include prescriptive
support activities that States must include in their support system. We
propose a minimum list of support activities to ensure that
participants have the necessary tools to successfully manage their
services and budgets. We were concerned that if States were not
required to include such activities as part of the support system
within the PAS State plan option, the likelihood of successfully self-
directing PAS would diminish. As we learned from our experience with
the section 1115 demonstrations and section 1915(c) waiver programs,
support activities have a crucial role in leading to the success of any
self-directed PAS program.
D. Accounting Statement and Table
As required by OMB Circular A-4 (available at http://www.whitehouse.gov/omb/circulars/a004/a-4.pdf
), in the table below, we
have prepared an accounting statement showing the classification of the
expenditures associated with the provisions of this proposed rule. This
table provides our best estimate of the increase in Medicaid payment as
a result of the changes presented in this proposed rule.
[[Page 3562]]
Table--Accounting Statement: Classification of Estimated Expenditures,
from FY 2008 to FY 2012
[In millions]
------------------------------------------------------------------------
------------------------------------------------------------------------
Category Transfers
------------------------------------------------------------------------
Annualized Monetized 3% Units Discount 7% Units Discount
Transfers. Rate.. Rate.
$25.2............... $24.8.
------------------------------------------------------------------------
From Whom To Whom?.......... Federal Government to Providers.
------------------------------------------------------------------------
Annualized Monetized 3% Units Discount 7% Units Discount
Transfers. Rate.. Rate.
$19.0............... $18.7.
------------------------------------------------------------------------
From Whom To Whom?.......... State Governments to Providers.
------------------------------------------------------------------------
E. Conclusion
As indicated in the estimated expenditures table above, we project
the Federal Medicaid program cost of this proposed rule to be $127
million over the period from FY 2008 to FY 2012.
In accordance with the provisions of Executive Order 12866, this
regulation was reviewed by the Office of Management and Budget.
List of Subjects in CFR Part 441
Aged, Family planning, Grant programs-health, Infants and children,
Medicaid, Penalties, and Reporting and recordkeeping requirements.
For the reasons set forth in the preamble, the Centers for Medicare
& Medicaid Services proposes to amend 42 CFR chapter IV as set forth
below:
PART 441--SERVICES: REQUIREMENTS AND LIMITS APPLICABLE TO SEPCIFIC
SERVICES
1. The authority citation for part 441 continues to read as
follows:
Authority: Sec 1102 of the Social Security Act (42 U.S.C. 1302).
2. Amend part 441 by adding new subpart J, consisting of Sec.
441.450 through Sec. 441.486, to read as follows:
Subpart J--Optional Self-Directed Personal Assistance Services Program
Sec.
441.450 Basis, scope, and definitions.
441.452 Self-direction: General.
441.454 Use of cash.
441.456 Voluntary disenrollment.
441.458 Involuntary disenrollment.
441.460 Participant living arrangement.
441.462 Statewideness, comparability, and limitations on number
served.
441.464 State assurances.
441.466 Assessment of need.
441.468 Service plan elements.
441.470 Service budget elements.
441.472 Budget methodology.
441.474 Quality assurance and improvement plan.
441.476 Risk management.
441.478 Qualifications of providers of personal assistance.
441.480 Use of a representative.
441.482 Permissible purchases.
441.484 Financial management services.
Subpart--J Optional Self-Directed Personal Assistance Services
Program
Sec. 441.450 Basis, scope, and definitions.
(a) Basis. This subpart implements section 1915(j) of the Act
concerning the self-directed personal assistance services (PAS) option
through a State Plan.
(b) Scope. A self-directed PAS option is designed to allow
individuals to exercise decision-making authority in identifying,
accessing, managing and purchasing their PAS. This authority includes,
at a minimum, all of the following:
(1) The purchase of PAS and supports for PAS.
(2) Recruiting workers.
(3) Hiring and discharging workers.
(4) Specifying worker qualifications.
(5) Determining worker duties.
(6) Scheduling workers.
(7) Supervising workers.
(8) Evaluating worker performance.
(9) Determining the amount paid for a service, support or item.
(10) Scheduling when services are provided.
(11) Identifying service workers.
(12) Reviewing and approving invoices.
(c) Definitions.
Assessment of need means an evaluation of the needs, strengths, and
preferences of participants for services.
This includes one or more processes to obtain information about an
individual, including health condition, personal goals and preferences,
functional limitation, age, school, employment, household, and other
factors that are relevant to the authorization and provision of
services. Assessment information supports the development of the
service plan and the subsequent service budget.
Individualized backup plan means a written plan that addresses
critical contingencies or incidents that would pose a risk of harm to
the participant's health or welfare and is incorporated into the
participant's service plan.
Legally liable relatives means persons who have a duty under the
provisions of State law to care for another person. Legally liable
relatives may include any of the following:
(1) The parent (biological or adoptive) of a minor child or the
guardian of a minor child who must provide care to the child.
(2) Legally-assigned caretaker relatives.
(3) A spouse.
Self-directed personal assistance services (PAS) means personal
care and related services, or home and community-based services
otherwise available under the State plan or a 1915(c) waiver program
that are provided to an individual who has been determined eligible for
the PAS option. Self-directed PAS also includes, at the State's option,
items that increase the individual's independence or substitutes (such
as a microwave oven or an accessibility ramp) for human assistance, to
the extent the expenditures would otherwise be made for the human
assistance.
Self-direction means the opportunity for participants or their
representatives to exercise choice and control over the budget,
planning, and purchase of self-directed PAS, including the amount,
duration, scope, provider, and location of service provision.
Service budget means an amount of funds that is under the control
and direction of a participant when the State has selected the State
plan option for provision of self-directed PAS. It is developed using a
person-centered and directed process and is individually tailored in
accordance with the participant's needs and personal preferences as
established in the service plan.
Service plan means the written document that specifies the services
and supports (regardless of funding source) that are to be furnished to
meet the needs of a participant in the self-
[[Page 3563]]
directed PAS option and to assist the participant to direct the PAS and
to remain in the community. The service plan is developed based on the
assessment of need using a person-centered and directed process. The
service plan builds upon the participant's capacity to engage in
activities that promote community life and respects the participant's
preferences, choices, and abilities. Families, friends and
professionals, as desired or required by the participant, will be
involved in the service-planning process.
Support system means information, counseling, training, and
assistance that support the participant (or the participant's family or
representative, as appropriate) in identifying, accessing, managing,
and directing their PAS and supports and in purchasing their PAS
identified in the service plan and budget.
Sec. 441.452 Self-direction: General.
(a) States must have in place, before electing the self-directed
PAS option, personal care services through the State plan, or home and
community-based services under a section 1915(c) waiver.
(b) The State must have both traditional service delivery and the
self-directed PAS service delivery option available in the event that
an individual voluntarily disenrolls or is involuntarily disenrolled,
from the self-directed PAS service delivery option.
(c) The State's assessment of an individual's needs must form the
basis of the level of services for which the individual is eligible.
(d) Nothing in this subpart will be construed as affecting an
individual's Medicaid eligibility, including that of an individual
whose Medicaid eligibility is attained through receipt of section
1915(c) waiver services.
Sec. 441.454 Use of cash.
(a) States have the option of disbursing cash prospectively to
participants self-directing their PAS.
(b) States that choose to offer the cash option must ensure
compliance with all applicable requirements of the Internal Revenue
Service.
(c) States must permit participants using the cash option to choose
to use the financial management entity for some or all of the functions
described in Sec. 441.484(c).
(d) States must make available a financial management entity to a
participant who has demonstrated, after additional counseling,
information, training, or assistance, that the participant cannot
effectively manage the cash option described in paragraph (a) of thi