July 12, 2023 Washington, DC — The Home and Community-Based Settings Final Rule (the “Settings Rule”), in effect since March 2023, creates significant challenges for both older adults seeking services in some home and community-based services (HCBS) settings, and for providers who serve them. 

A new white paper, Home and Community-Based Settings Rule: How Regulation Intended to Ensure Access to Medicaid Funded Services Falls Short, and Changes Needed to Fix It, released today from LeadingAge, the association of nonprofit providers of aging services, explains how flawed policy fails to achieve its intent of ensuring access to person-centered care – and recommends urgently needed solutions.      

“While the intent of the Settings Rule is laudable, in practical application, it is problematic. This important paper explains, using real-world examples, how good-faith implementation of and compliance with the rule is impractical,” said Katie Smith Sloan, president and CEO, LeadingAge. “What’s more, when applied to certain types of care settings, including assisted living and adult day services, the rule’s requirements could potentially harm an older adult. As a result of these issues, the rule is limiting older adult Medicaid beneficiaries’ access to HCBS – the opposite of its intent. That’s why we ask for a two-year enforcement moratorium for aging services providers while the Biden Administration develops aging-services specific guidance.” 

The paper provides details on how the rule, first proposed in 2008, published as a prospective rule in 2014, and now final, does not advance person-centered care and in fact, raises obstacles for providers seeking to deliver it. 

• Centers for Medicare and Medicaid Services (CMS) surveyors inspected in March 2023 an assisted living provider with a memory care unit in Wichita, Kansas. In their follow up letter, surveyors outlined areas of rule noncompliance for failure to offer volunteer opportunities or employment counseling during the person-centered planning process. CMS said “the setting should ensure that individuals are informed of their choices for competitive, integrated employment.” The recommendation by CMS that seniors, including individuals with dementia, living in an assisted living residence, should be offered employment counseling is out of touch. 
• To comply with the rule’s requirement of ensuring older adults’ integration into community by providing outings and field trips, one LeadingAge adult day provider member took participants to the only destination in close geographic proximity: the DollarTree store. The visit ensures rule compliance, but the value to older adult participants, many of whom do not have access to money due to cognitive decline, limited finances, or both, is unclear. It is an unfair burden for staff, too, as they are often called on to pay for items if a participant forgets his wallet or lacks money at check out. This example demonstrates the multitude of unknowns that must be addressed when providers determine their approach to rule compliance: what types of group outings meet the community integration requirement? What types and specific activities does CMS deem appropriate for older adult HCBS Medicaid beneficiaries? How will participants with fixed or limited incomes pay for the outings, particularly after having covered other costs associated with adult day participation? 
• Per rule requirements, older adult Medicaid beneficiaries must be able to secure their belongings. For older adult assisted living residents with diagnosed dementia – an estimated 40% of the assisted living population – inadvertently locking their own door is a very real problem. It results in frustration, confusion and possible harm. In an adult day setting serving dementia-diagnosed older adults, compliance with the rule has been interpreted to mean that providers need to install lockers. Individuals with cognitive challenges cannot be expected to remember locker combinations or the location of their keys to access their belongings. 
• One state Medicaid agency decided against including assisted living services to its HCBS options due to concerns over the state’s ability to demonstrate compliance with the rule.  

Sloan added: “Ensuring access to quality HCBS long-term services and supports is a key tenet of Medicaid programs. This rule, however well-intentioned, simply does not work for aging services. And sadly, those most impacted are older adults and families, as well as the providers who serve them. It’s time to take action: CMS must develop guidance that works.”