Washington, DC (June 26, 2015)

The Centers for Medicaid and Medicare Services (CMS) issued guidance on how they intend to address “heightened scrutiny” for settings that are subject to the home and community based services (HCBS) rule that went into effect on March 17, 2014.  The guidance restates the standard for settings that are presumed institutional (located in a building that is also a publicly or privately operated facility that provides inpatient institutional treatment, or in a building located on the grounds of, or immediately adjacent to, a public institution).  Additionally, any setting which has the effect of isolating individuals will be presumed to be institutional.  For any of these instances, a state may submit evidence to overcome the presumption and demonstrate how the setting does meet the HCBS standards set forth.  The new rules also offer states the option to develop “tiered standards for residential settings” which will allow states to “close the front door” to some providers while allowing existing providers of the same services to continue.  This means that a state could set one compliant standard for existing providers and set a different, higher standard for new providers.