Regulation in effect since March 2023 creates significant challenges for older adults and providers who serve them. A LeadingAge white paper, released in July 2023, explains how this rule fails to achieve its intent of ensuring access to person-centered care—and recommends urgently-needed solutions.     

What is the Home and Community-Based Services Settings Rule?

The Home and Community-Based Settings (HCBS) Final Rule is a response to the 1999 Supreme Court Decision Olmstead v. L.C., which found that Medicaid programs were discriminating against long-term care users by not offering them the most integrated settings of care. Known as the “Settings Rule,” it was first proposed in 2008, published as a prospective rule in 2014, and became effective in March 2023. 

What is LeadingAge’s position on the final rule?

Ensuring access to quality long-term services and supports in home and community-based settings (HCBS) is a key tenet of Medicaid programs. The Settings Rule, which aims to protect the civil rights of people who use Medicaid-funded HCBS by ensuring that the services provided are separate and distinct from institutions, is, in practical application, problematic.  The rule defines all care settings as “community-based” or not. However, some services for older adults do not fit neatly into either of these categories. Good-faith implementation of and compliance with the rule is impractical, and states’ enforcement varies widely. 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. “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 in a press release.

What are some examples? 

LeadingAge’s mission-driven, nonprofit members, who serve older adults in assisted living, adult day, and other HCBS settings, have shared a multitude of examples to demonstrate how the Settings Rule, as currently written, does not advance person-centered care and in fact dilutes the rule’s laudable goal of expanding and ensuring access to care in HCBS. 

1. 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 and not person-centered.
2. A multitude of unknowns 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? Consider this anecdote from one LeadingAge member: to comply with the rule’s requirement of ensuring older adults’ integration into community by providing outings and field trips, the adult day provider took participants to the only destination in close geographic proximity: the Dollar Tree 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. 
3. The settings rule requires that older adult Medicaid beneficiaries must be able to secure their belongings. For older adult assisted living residents with diagnosed dementia – an estimated 40 percent 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. Can individuals with cognitive challenges truly be expected to remember locker combinations or the location of their keys to access their belongings at days’ end? In short, this is a regulation at odds with the goal of ensuring person-centered care. 
4. 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 Settings Rule.

What are LeadingAge’s core concerns for aging services providers? 

The rule applies broadly to all populations receiving HCBS, and the lack of specialization has created obstacles for aging services providers and their participants–particularly in adult day and assisted living services who serve large populations of older adults with living with dementia.

HCBS providers serving older adults create person-centered plans that must take into account best practices for providing services to people with dementia (i.e., sticking to routines, lessening excess stimuli, and ensuring individuals are surrounded by familiar faces). The rule conflates independence for individuals able to learn new skills with independence for those working hard to hold on to their long-held skills. 

What are LeadingAge’s recommendations to address these concerns? 

LeadingAge urges the administration to facilitate continued access to aging services by developing aging-services specific sub-regulatory guidance during a two year enforcement moratorium for these providers.

For more detailed information on the settings rule and LeadingAge’s position, follow the serial post  and LeadingAge HCBS Settings Rule white paper.