Medicaid Program; Self-Directed Personal Assistance Services Program State Plan Option (Cash and Counseling), 57854-57886 [E8-23102]

Agencies

• Centers for Medicare & Medicaid Services
• DEPARTMENT OF HEALTH AND HUMAN SERVICES

[Federal Register Volume 73, Number 193 (Friday, October 3, 2008)]
[Rules and Regulations]
[Pages 57854-57886]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-23102]



[[Page 57853]]

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Part IV





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); Final Rule

Federal Register / Vol. 73, No. 193 / Friday, October 3, 2008 / Rules 
and Regulations

[[Page 57854]]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Part 441

[CMS-2229-F]
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: Final rule.

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SUMMARY: This final rule provides guidance to States that want to 
administer self-directed personal assistance services through their 
State Plans, as authorized by the Deficit Reduction Act of 2005. The 
State plan option allows beneficiaries, through an approved self-
directed services plan and budget, to purchase personal assistance 
services. The rule also provides guidance to ensure beneficiary health 
and welfare and financial accountability of the State Plan option.

DATES: Effective date: November 3, 2008.

FOR FURTHER INFORMATION CONTACT: Marguerite Schervish, (410) 786-7200.

SUPPLEMENTARY INFORMATION: 

I. Background

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 
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.

    Note: CMS released a pre-print for use by States, at their 
discretion, to submit a State plan section 1915(j) amendment, which 
was approved under OMB 0938-1024.


[[Page 57855]]



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 plan. 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 & 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 v. 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 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 (ICF-MR).
    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 & 
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.
    This final rule finalizes provisions set forth in the January 18, 
2008 proposed rule.

II. Analysis of and Responses to Public Comments on the Proposed Rule

    We received a total of 55 timely comments from home care agencies 
and provider associations, State Medicaid directors, home care 
providers, unions, beneficiaries, and other individuals and

[[Page 57856]]

professional associations. The comments ranged from general support or 
opposition to the proposed provisions to very specific questions and 
detailed comments regarding the proposed changes. A summary of our 
proposals, the public comments, and our responses are set forth below.

General

    Comment: Several commenters expressed support for the rule and the 
options, rights, support, and safeguards the provisions gave to 
participants. One commenter was appreciative of the possibility to be 
able to hire a caregiver of her own choosing. Another commenter stated 
that her ``hard to serve'' clients were satisfied with hiring persons 
of their choosing and that another client was able to get more hours of 
``flexible'' care to fit her individualized needs and wishes.
    Response: We appreciate the perspectives these commenters had in 
support of the rule.
    Comment: Several commenters indicated opposition to the self-
directed service delivery model. Some commenters stated that the model 
was not appropriate for most Medicaid beneficiaries. Other commenters 
were concerned that under the self-directed delivery model, caregivers 
were inadequately trained, that there was insufficient oversight of the 
care being provided beneficiaries, and that the potential for fraud, 
abuse, neglect, and exploitation increased.
    Response: We disagree that the self-directed service delivery model 
is an inappropriate model. Our experience with programs that offer 
self-direction in section 1915(c), home and community-based services 
waiver programs and section 1115 demonstration programs, has confirmed 
the positive results found in the formal evaluation of the ``Self-
Determination'' and ``Cash & Counseling'' projects. These programs 
successfully offered the self-directed service delivery model to 
children, older persons, and persons with cognitive impairments, 
developmental disabilities, and mental health needs. This final rule 
requires numerous participant safeguards, including the requirement for 
a support system that provides information about self-direction, as 
well as any counseling, training and assistance that may be needed or 
desired by participants to effectively manage their services and 
budgets. Key components of the support system are the support brokers 
and consultants who help participants perform tasks (for example, 
locating and accessing needed services, developing a service budget 
plan, and monitoring the beneficiary's management of the PAS and 
budget). Additionally, the support system includes financial management 
services entities that perform, or assist participant beneficiaries who 
have elected the cash option to perform, the employer-related and tax 
responsibilities. States may also add other activities that they deem 
necessary or appropriate in their support systems.
    Other participant protections include requirements for an 
assessment of the individual's needs, strengths, and preferences for 
self-directed PAS; the use of a representative when needed; a person-
centered planning process that engages the individual and also involves 
the individual's family, friends, and professionals in the planning or 
delivery of services or supports; a quality assurance and improvement 
plan; and individualized backup plans that address critical 
contingencies or incidents that would pose a risk of harm to the 
participant's health and welfare. We also require that States have in 
place a risk management system that identifies potential risks to the 
participant and employs tools or instruments (for example, criminal and 
worker background checks) to mitigate risks. The statute and this final 
rule further require States to assure that necessary safeguards have 
been taken to protect the health and welfare of individuals furnished 
services under this program and to assure financial accountability for 
the funds expended for self-directed services.
    Comment: Some commenters requested clarification about the impact 
of funds paid to legally liable relatives, including a parent-
caregiver, on the individual's or family's resources for other public 
benefit programs. The commenters urged that CMS work with other Federal 
partners to ensure that the receipt of cash would not jeopardize other 
public benefit programs and that we work to enact needed changes 
through legislation.
    Response: The scope of this regulation does not extend to the 
impact of funds paid to legally liable relatives on their receipt of 
public benefits. However, we will take under advisement the suggestion 
of working with other agencies to address the impact of the cash option 
on the receipt of other public benefits.
    Comment: One commenter sought clarification on whether CMS will 
require a State that has already implemented elements of self-direction 
under its State plan and waivers to modify these existing programs or 
submit a State plan amendment in compliance with the new rule. This 
same commenter sought clarification on whether the section 1915(j) 
option would be the exclusive authority for self-directed services or 
whether States may pursue or rely on other Medicaid authorities.
    Response: We have not required and do not intend to require any 
State to submit a section 1915(j) State plan amendment, nor is the 
section 1915(j) opportunity the exclusive opportunity for a State to 
pursue the self-directed service delivery model. States are free to use 
some, all, or none of the appropriate Medicaid authorities that are 
available for use of the self-directed service delivery model.
    Comment: One commenter requested clarification on the impact of the 
rule on a participant's eligibility for self-directed PAS, generally 
focusing on the interaction with a section 1915(c) waiver program. The 
commenter requested clarification on the following:
    (1) Whether a participant may receive a budget for self-directed 
PAS and concurrently receive waiver services, or whether States may 
limit or deny access to waiver services.
    (2) Whether waiver recipients who elect the self-directed PAS 
service option are considered enrolled in the waiver, and whether 
waiver ``slots'' must be set aside for persons who may disenroll from 
the option.
    (3) Whether CMS intends to allow States to cover services beyond 
personal care and items that increase independence or substitute for 
human assistance.
    (4) Whether individuals who are eligible for section 1915(c) waiver 
services under the special income group may be eligible for the self-
directed PAS State plan option.
    (5) Whether the individual would have to maintain enrollment in a 
waiver and what threshold is required to maintain that enrollment (for 
example, meeting the level of care criteria, having a plan of care, or 
receiving a waiver service on a periodic basis).
    Response: Our response follows the order of the commenter's 
questions as noted above.
    (1) It is permissible for an individual to participate in the self-
directed PAS State plan option and concurrently receive services under 
a section 1915(c) waiver program as a State can select which of the 
section 1915(c) waiver services participants will have the opportunity 
to self-direct. It is not permissible to limit or deny a participant 
the other section 1915(c) waiver services for which the participant is 
eligible but not self-directing. Specifically, 42 CFR 441.472(d) 
requires that the ``budget may not restrict access to other

[[Page 57857]]

medically-necessary care and services furnished under the plan and 
approved by the State but not included in the budget.''
    (2) Participants who elect the self-directed PAS State plan option 
may remain ``enrolled'' in their section 1915(c) waiver program and 
their so-called ``slots'' must be kept available in the event the 
participant voluntarily disenrolls or is involuntarily disenrolled from 
the self-directed PAS State plan option.
    (3) When a State offers the opportunity to self-direct State plan 
personal care services (PCS), we do not believe it would be permissible 
for participants to purchase services that are not included within the 
State's definition of its PCS benefit. However, we recognize that both 
the statute and regulation at Sec.  441.470(d) allow a State, at the 
State's election, to offer participants the opportunity to reserve 
funds to purchase items that increase independence or substitute for 
human assistance, to the extent that expenditures would otherwise be 
made for human assistance, including additional goods, supports, 
services, or supplies. We intend to issue further guidance on the 
criteria for permissible purchases to assist States in deciding the 
scope of the permissible purchases in their self-direction programs. We 
believe that, at a minimum, the permissible purchase must relate to a 
need or goal identified in the service plan.
    (4) Individuals who are eligible for section 1915(c) home and 
community-based waiver services under the special income group may be 
eligible for the self-directed PAS State plan option.
    (5) A participant would have to maintain all eligibility, level of 
care, and other requirements for the section 1915(c) waiver program. 
If, upon reassessment, a participant would no longer be eligible for 
the section 1915(c) waiver services through which the participant was 
able to self-direct their PAS, then the participant would no longer be 
able to self-direct their PAS under this State plan option.
    Comment: Some commenters stated that they believe that the self-
directed service delivery model would reduce the viability of agencies 
that deliver traditional agency-delivered services especially in rural 
or difficult to serve areas, would force individuals into a more 
expensive option, such as a skilled nursing facility (SNF) or hospital, 
and would delay hospital discharges and would force more agencies to 
only serve private pay clients.
    Response: The evaluations conducted on the ``Self-Determination'' 
and the ``Cash & Counseling'' national projects have provided evidence 
of consumer satisfaction and quality of care. In addition, our 
experience with the section 1115 demonstration and section 1915(c) 
waiver programs has not shown this impact on traditional agency-
delivered services. Therefore, we do not believe that the consequences 
noted in the comments regarding the self-directed service delivery 
model are necessarily predicted outcomes.
    Comment: One commenter disagreed that the self-directed service 
delivery model costs less than traditional agency-delivered services.
    Response: We have not asserted that the self-directed PAS State 
plan option costs less than the traditional agency-delivered service 
model. Two national pilot projects demonstrated the success of the 
self-directed service delivery model. The ``Self-Determination'' and 
the ``Cash & Counseling'' national projects were evaluated in a 
scientifically designed study. The evaluation results of those projects 
were similar and concluded that 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. The 
results did not necessarily confirm that self-directed care costs less. 
For example, the results in the ``Cash & Counseling'' States indicated 
that Medicaid personal care costs were somewhat higher under ``Cash & 
Counseling'', mainly because enrollees received more of the care they 
were authorized to receive, as compared to the services delivered under 
the traditional agency model. Another finding was that increased 
Medicaid personal care costs under ``Cash & Counseling'' were partially 
offset by savings in institutional and other long-term-care costs. 
Furthermore, the findings also suggested that ``Cash & Counseling'' 
need not cost more than traditional programs if states carefully design 
and monitor their programs. For example, States could design their 
``Cash & Counseling'' programs so that the cost per month is budgeted 
to match the cost per month of its traditional system, assuming that 
home care agencies will fully meet their care obligations. If the 
traditional system delivers the services beneficiaries are authorized 
to receive, there should be no difference in planned costs.
    Comment: Two commenters expressed concern that the proposed rule 
added too many additional administrative requirements that would be 
burdensome or costly to States. One commenter thought that the rule 
would eliminate the efficiencies intended by the Congress.
    Response: We acknowledge that States that have not yet developed 
the infrastructure necessary to support the self-directed service 
delivery model, in particular developing a support system, may 
experience higher initial administrative burdens and costs when 
designing their self-directed PAS programs. Regardless of whether a 
State uses its self-directed PAS State plan option, a section 1915(c) 
home and community-based services waiver option, or a section 1915(i) 
home and community-based services State plan option to offer the self-
directed service delivery model, there will be administrative and 
support system requirements, and State Medicaid agencies must exercise 
administrative and oversight functions over their Medicaid programs.

Basis, Scope & Definitions (Sec.  441.450)

    We proposed to implement section 1915(j) of the Social Security Act 
(the Act) concerning the self-directed PAS option through a State plan. 
We proposed that individuals who self-direct their PAS under this 
option have the decision-making authority to identify, access, manage, 
and purchase their PAS including a proposed list of minimum activities 
over which the individuals may exercise decision-making authority. We 
proposed several definitions specific to the self-directed PAS State 
plan option.
    Comment: One commenter recommended that CMS add a reference to ``or 
their representative(s)'' whenever the rule refers to individuals or 
participants.
    Response: We agree with the comment because the use of a 
representative to assist the individual or participant in exercising 
their decision-making authority is consistent with the self-directed 
service delivery model. Accordingly, we have revised the part 441, 
subpart J in relevant places by adding ``or their representatives'' 
when we refer to ``individuals'' or ``participants.''
    Comment: A few commenters suggested that CMS add ``training'' of 
the PAS providers to the list of items subject to the participant's 
authority in Sec.  441.450(b) and that participants have access to 
training provided by or through the State.
    Response: We agree with the comment about adding ``training'' to 
the list of items subject to the participant's authority because the 
ability of a

[[Page 57858]]

participant to train the provider of their PAS in the participant's 
needs and in a manner that comports with the participant's preferences 
is crucial to the self-directed service delivery model. Accordingly, we 
have revised the authority provision at Sec.  441.450(b)(4) to 
expressly include the ability of the participant to train their 
workers. We also believe that there are circumstances in which 
participants may desire that their PAS providers secure additional 
training beyond what the participants can provide. Accordingly, we have 
further revised the authority provision at Sec.  441.450(b)(4) to 
permit participants to have access to other training provided by or 
through the State so that their PAS providers can meet any additional 
qualifications that participants think their providers may need.
    Comment: Some commenters thought that Sec.  441.450(b) should be 
revised to include the ability of the participant to select his or her 
own financial management services (FMS) entity and his or her own 
supports brokers or consultant.
    Response: We believe that the services of the FMS entities are 
administrative functions and that States have the authority to 
determine whether or not to limit the FMS entities that will provide 
the FMS functions. We believe that the functions of a supports broker 
or consultant comprise a service that is unique to this State plan 
option and, as such, recognize that States would want to be able to 
claim Federal medical assistance percentages (FMAP) for this service. 
The supports broker or consultant performs a variety of key functions 
that include the provision of information, counseling, training and 
assistance, or helping participants access needed information, 
counseling, training and assistance to help participants effectively 
manage their PAS. Typically, they may assist participants in locating 
and accessing needed services, developing service budget plans and 
helping participants to fulfill their roles and responsibilities as an 
employer. Based on our experience with self-direction programs under 
section 1115 demonstrations or section 1915(c) waiver programs, we have 
learned that participants desired the opportunity to select a different 
supports broker or consultant if the relationship between an assigned 
supports broker or consultant and the participant was not satisfactory. 
We have revised the rule at Sec.  441.450(c) to add a definition for 
``supports broker'' or ``consultant.'' Further detail on the definition 
is provided in response to another comment.
    Comment: Some commenters expressed disagreement with the 
requirement that participants are allowed to determine the amount paid 
for a service, support, or item stating that a State law or collective 
bargaining agreement could conflict with this authority. One commenter 
thought that this requirement was inconsistent with the statutory 
language and congressional intent and would deprive States of their 
``traditional wage standard-setting role.'' Another commenter asked for 
clarification on how the requirement comports with State plan rate-
setting requirements, including the requirement that there must be 
public notice of any significant proposed change in methods and 
standards for setting payment rates.
    Response: We believe that the statutory authority contemplates 
including participants in the decision-making authority over the amount 
paid for a service, support or item. We believe that only a few States 
have actually set the precise wages for participants of self-direction 
programs. Indeed, we believe that most States reimburse varying amounts 
even for services provided by traditional service models. We further 
note that the requirement for public notice applies to rates paid by 
the Medicaid agency for services. In the case of self-directed 
services, it would be the budget amount upon which Medicaid 
reimbursement would be based. The rate that the participant pays their 
provider of PAS from the available budgeted amount is outside the scope 
of the requirement for public notice of Medicaid rate setting.
    Comment: One commenter was confused about the apparent multiple 
meanings for the word ``support'' or ``supports.'' The commenter 
suggested that we amend the rule to clarify that the State has the 
discretion to limit supports that are beyond the State's obligation, 
such as repeated counseling, training, and assistance sessions.
    Response: To clarify, in the context of self-directed PAS, 
``supports'' generally means a service or item that a participant can 
purchase and ``support'' generally means the information, counseling, 
training, or assistance provided under the support system, including 
that provided by a support broker or consultant. We disagree that the 
regulation needs further amending to allow the State to provide limits 
to the PAS supports. If participants demonstrate that they cannot 
effectively manage their PAS or budgets, the rule provides States with 
options such as offering additional assistance, including FMS; 
mandating the use of a representative; or involuntarily disenrolling a 
participant from the self-directed PAS option.
    Comment: One commenter requested clarification about how the 
requirement that States have a mechanism that satisfies the Medicaid 
requirements on provider agreements would apply when vendors furnish 
items and supplies. It is unclear who the ``enrolled provider'' is when 
services, items, or supplies are purchased with cash.
    Response: As self-directed PAS is not ``cash assistance'' but 
rather is a service delivery model, the requirements on provider 
agreements at section 1902(a)(27) of the Act would not be a barrier if 
a State elected the cash option.
    Comment: One commenter thought the definition of ``assessment of 
need'' was too vague. The commenter recommended use of a standardized 
assessment instrument.
    Response: We believe the definition of ``assessment of need'' is 
adequate. We acknowledge that a standardized assessment instrument 
could lead to more uniformity in determining an individual's PAS needs 
and encourage their use where possible. However, it may not be useful 
in determining the strengths, personal goals, and preferences of the 
individual for PAS which is essential in a self-directed service 
delivery model. Accordingly, we are not amending the definition of 
``assessment of need'' to require States to use a standardized 
assessment instrument, but recognize a State may nonetheless choose to 
do so.
    Comment: Some commenters suggested language to be included in the 
definition of ``individualized backup plans.'' The recommended language 
included additional language for the following areas: respecting the 
individual's choices and preferences, planning for emergency 
preparedness, and a State assessment of worker shortage that could 
possibly impact the ability of an agency to provide back-up care, and 
if a shortage exists, require that the individual cannot enroll unless 
a backup plan can be developed that relies on family, personal, and 
available community services.
    Response: We agree with the comment that an individualized backup 
plan has to respect the individual's choices and preferences and not 
substitute the individual's choices with those of others who may be 
participating in the development of the backup plan. We believe that 
this is consistent with the ``dignity of risk'' concept that recognizes 
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. The

[[Page 57859]]

individualized backup plan is related to the provisions of the rule at 
Sec.  441.476 on risk management and should occur as part of the 
discussion about the risks an individual is willing and able to assume. 
As it is of utmost importance that the backup plan is individually 
tailored to the individual's needs and preferences, we believe that a 
State or regional approach that treats all participants' contingencies 
the same by imposing a requirement that participants should simply 
contact 911 emergency services in the event of a critical contingency 
or incident, is not a sufficiently individualized backup plan. We have 
revised the definition of ``individualized backup plan'' in Sec.  
441.450(c) to clarify that the individualized backup plan must 
demonstrate an interface with the risk management provision at Sec.  
441.476 which requires States to assess and identify the potential 
risks to the participant (such as any critical health needs), and 
ensure that the risks and how they will be managed are the result of 
discussion and negotiation among persons involved in the service plan 
development. We have also revised the definition to include that the 
backup plan must be individualized as well as not include a 911 
emergency system or other emergency system as the sole backup feature 
of the plan.
    We also agree that emergency preparedness may be a part of the 
individualized backup planning; however, we must stress that these two 
things are not the same. We view ``emergency preparedness'' as 
addressing the contingency of a natural disaster or other similar 
catastrophic disaster and planning for how the participant will be 
secured or evacuated to safety. We view the ``individualized backup 
plan'' as a much broader participant protection than emergency 
preparedness. We view the individualized backup plan as a cornerstone 
to self-directed PAS because it sets forth the participant's wishes in 
a critical contingency or incident that would pose a risk of harm to 
the participant's health or welfare. While ``emergency preparedness'' 
can be part of an individualized backup plan, we do not believe 
additional language is necessary for it to be included.
    We disagree with the comment that individuals should not be 
permitted to enroll in the self-directed PAS State plan option if an 
individualized backup plan cannot be developed which relies on family, 
personal, and available community services. While we are aware that 
some individuals who select the self-directed State plan option will 
not have access to family and personal resources or to community 
resources, in these instances, the supports broker or consultant would 
help the individual locate and access the providers of PAS needed by 
the individual. If, after reasonable effort by the supports broker or 
consultant, it is not possible to locate providers of PAS suitable to 
the individual, then it would be permissible to delay the individual's 
enrollment in the self-directed PAS option until such time as suitable 
providers of their PAS can be found. We do not believe that the 
definition of ``individualized backup plan'' needs to be revised to 
reflect this procedure because the definition of ``supports broker or 
consultant'' indicates that one of the roles of the supports broker or 
consultant is to help an individual locate and access needed PAS, if 
necessary.
    Comment: We invited comments on other possible relationships that 
could be included within the definition of ``legally liable relatives'' 
(LLRs). One commenter thought that ``significant others'' should be 
included in the definition. Some commenters suggested that we amend the 
rule to include provider training requirements and other safeguards. 
Another commenter suggested that we amend the regulation to require 
States to have a mechanism to deal with situations in which 
participants may be pressured to hire a family member or friend or are 
having difficulty discharging a family member or friend.
    Response: We disagree that the definition should be revised to 
include ``significant others.'' We believe it is up to the States to 
determine what relationships they include in their definition of 
``legally liable relatives''. We also disagree that the regulation 
should be revised to specify certain safeguards, such as minimum 
training requirements, competency evaluations, criminal background 
checks, or other modifications to ensure that PAS workers, including 
LLRs, are properly trained and qualified to perform the functions of 
their jobs. One of the most valued aspects of a self-directed program 
is that participants have the authority to train their providers of PAS 
in what they need and how to deliver the PAS in accordance with their 
personal, cultural, and religious preferences. As noted previously, we 
have revised the regulation at Sec.  441.450 to permit participants to 
have access to other training provided by or through the State so that 
their PAS providers can meet any additional qualifications that 
participants think are needed or desired. Accordingly, we do not 
believe that the rule needs to be revised to specify provider training 
requirements as this will vary from participant to participant. We 
further do not believe that the regulations need to be revised to 
require that States have a mechanism to deal with situations in which 
participants may be pressured to hire a family member or friend or 
where they are having difficulty discharging a family member or friend. 
The role of the supports broker or consultant is to assist the 
participant in managing their PAS and budget plans, including how to 
hire the person most suitable to the participant, and how to discharge 
the worker if necessary. Finally, as noted above, we do not believe the 
regulation needs to be revised to add more safeguards to detect whether 
needed services are actually being provided. We believe that the 
regulation provides sufficient participant protections to detect 
whether needed services are actually being provided. It is CMS' 
expectation that participants' services and budget plans will be 
monitored by supports brokers or consultants; that the FMS entities, as 
required in the rule, will report any irregularities detected to 
participants and States; and that the State Medicaid agency will 
exercise ongoing oversight and monitoring of the provision of PAS 
through its Quality Assurance and Improvement Plan and remediate any 
problematic issues for participants.
    Comment: One commenter noted that the definition of ``self-
direction'' did not acknowledge that participants who self-direct their 
PAS must have the ability to perform the required roles and 
responsibilities. Another commenter sought further clarification of the 
definition of ``self-direction.'' The commenter stated that a 
clarification may be needed to ensure that the maximum amount and scope 
of a person's budget will not exceed the level of services determined 
by the assessment or the budget established by the valid budget 
methodology.
    Response: The self-directed service delivery model does not presume 
who can and cannot self-direct their PAS. Instead, the model requires 
that the participant is assessed for their need for PAS, and furnished 
the necessary information, counseling, training, and assistance so that 
the participant can manage his services and budget. In addition to the 
support system, the regulations provide several other mechanisms that 
enable participants to manage their services and budgets such as the 
use of a representative to assist the participant to exercise his 
decision-making authority over the services and budget. If a 
participant is no longer able or willing to self-direct their PAS, the

[[Page 57860]]

State is allowed to require additional assistance for the participant, 
mandate the use of a representative, or, if need be, involuntarily 
disenroll the participant. Therefore, we have not revised the 
regulation as we do not believe any clarification is necessary. 
Moreover, the regulation at Sec.  441.470 clearly sets out the steps 
for determining a participant's budget amount such that we do not 
believe that the budget will exceed the level of needed PAS.
    Comment: A few commenters had concerns about the definition of the 
``service plan.'' One commenter suggested that the definition not 
require unpaid caregivers to attend the planning meeting, but instead, 
provide the service hours that are included in the service plan. One 
commenter cautioned against a reduction in the budget based on an 
erroneous assumption that informal support is available and another 
sought minimum qualifications for those responsible for development of 
the service plan.
    Response: The definition of ``service plan'' permits the 
participant to direct the planning process, including inviting the 
participant's family or others of the participant's choosing to the 
planning meeting. This is not a requirement, however. In addition, we 
believe it would be inappropriate to revise the definition to require 
any minimum qualifications of individuals responsible for development 
of the service plan as States should have the flexibility to craft 
their own requirements. However, we acknowledge that there may be a 
``lead'' person who will assume responsibility for assuring that the 
planning meetings occur and that the resultant plan meets the 
regulatory requirements. We would expect that this individual or 
individuals would minimally be familiar with person-centered and 
directed planning and person-centered services, and preferably possess 
demonstrated skill to facilitate person-centered and directed planning. 
We wish to clarify that our reference to persons who are ``required'' 
to attend the planning meeting was to include those persons who may be 
required by the State to attend the person-centered planning meeting. 
We did not intend to suggest that the participant should require the 
attendance of family, friends, or others who do not wish to participate 
in the meeting. Finally, we agree that the service budget should not be 
reduced based on an erroneous assumption about the level of service 
that an informal caregiver would be providing.
    Comment: Two commenters indicated that the requirements for a 
comprehensive assessment, care planning, health and welfare assurances, 
and monitoring appear to meet the definition of case management as 
defined in section 6052 of the DRA, Optional State Plan Case Management 
Services. They also requested clarification on whether a participant 
who elects this option will be unable to receive any other type of case 
management covered by Medicaid. One commenter asked how States would 
reconcile the requirements of the self-directed PAS State plan option 
final rule with section 6052 of the DRA. For example, as outlined in 
the January 18, 2008 self-directed PAS State plan option proposed rule, 
CMS ``requires case management services under self-directed PAS,'' but 
the case management provision of the DRA prohibits States from 
requiring beneficiaries to receive case management. Furthermore, the 
commenter suggested that the self-directed PAS State plan option 
proposed rule requires ``gate-keeping'' and advocacy functions but the 
case management DRA provision requires these functions to be separated 
by payment source and beneficiaries to be allowed to select from all 
qualified providers. One commenter asked how CMS could require a case 
manager to monitor the participant's service plan under the self-
directed PAS State plan option, if, as stated in the case management 
DRA provision, the State cannot bill for services defined as ``case 
management'' as administrative or other services.
    Response: We believe that the functions that are required of the 
supports broker or consultant are not ``case management'' within the 
definition of case management provided pursuant to section 1915(g)(2) 
of the Act, as revised by section 6052 of the DRA. Section 1915(g)(2) 
of the Act defines case management services for purposes of section 
1915(g) of the Act as services that will ``assist individuals eligible 
under the State plan in gaining access to needed medical, social, 
educational, and other services.'' Case management includes the 
following: Assessment of an eligible individual to determine service 
needs, including activities that focus on needs identification; 
development of a specific care plan based on the information collected 
through the assessment; referral and related activities to help an 
individual obtain needed services, including activities that help link 
the eligible individual with medical, social, educational providers, or 
to other programs and services that are capable of providing needed 
services; and monitoring and follow-up activities, including activities 
and contacts that are necessary to ensure that the care plan is 
effectively implemented and adequately addresses the needs of the 
eligible individual.
    We believe that the relationship between a supports broker or 
consultant and a participant and the assistance provided by the 
supports broker or consultant in the self-directed PAS State plan 
option is fundamentally different than the relationship required 
between a case manager and beneficiary and the assistance provided by a 
case manager. Supports brokers or consultants are agents of the 
participants in that they are primarily responsible for facilitating 
participants' needs in a manner that comports with the participants' 
preferences. As the relationship that develops must be supportive and 
ongoing, participants may request a different supports broker or 
consultant if the relationship is not working out. Furthermore, the 
functions performed by supports brokers or consultants are unique to 
the self-directed service delivery model because supports brokers or 
consultants are primarily responsible for providing information, 
training, and counseling and assistance, as desired by participants, 
that help participants effectively manage their PAS and budgets. These 
functions include helping participants develop their service budget 
plans and fulfill their employer-related responsibilities. This 
assistance can also include helping participants locate and access PAS, 
but supports brokers or consultants do not perform assessments of need 
or develop care plans. Although supports brokers or consultants do 
perform a monitoring function for the purpose of checking whether 
participants' health status has changed, they are also verifying 
whether expenditures of funds are being made in accordance with the 
service budget plans.
    Because of the unique position of a supports broker or consultant 
under the self-directed PAS State plan model, we believe that a 
traditional case manager can perform the functions of supports brokers 
or consultants only if they receive training in the self-directed 
service delivery model that includes a demonstrated capacity to 
understand that they are to assist the participants with fulfilling 
their preferences, and not supplant the participants' preferences with 
their views or preferences. As evidenced by the comment, it is 
important to avoid confusion between the functions of a supports broker 
or consultant and the services furnished by a case manager, and we 
believe a definition of supports broker or

[[Page 57861]]

consultant would clarify the functions. Accordingly, we have revised 
Sec.  441.450(c) to add a definition of supports broker and consultants 
that reflects the unique role and functions of the supports broker or 
consultant; that requires States to develop a protocol to ensure that 
supports brokers or consultants are accessible to participants, have 
regularly scheduled phone and in-person contacts with participants, 
monitor whether participants' health status has changed and whether 
expenditure of funds are being made in accordance with service budget 
plans; and to require that supports brokers or consultants meet the 
training and monitoring requirements and qualifications required by 
their respective State. We have also added to Sec.  441.450(c) the 
requirement that support brokers or consultants be available to each 
participant as part of the support system.
    Comment: One commenter suggested that we include a definition of 
``person-centered services'' or ``person-directed planning'' because it 
is critical that States have a uniform understanding and application of 
these concepts.
    Response: We include in the regulations at Sec.  441.468(b)(1) a 
requirement that the service planning process be ``person-centered and 
directed'' to ensure the identification of each participant's 
preferences, choices, and abilities, and strategies to address those 
preferences, choices, and abilities. We further require at Sec.  
441.468(c)(1) that the State's procedures governing service plan 
development allow the participant to engage in and direct the process 
to the extent desired, and allow the participant the opportunity to 
involve family, friends, and professionals. We do not believe that the 
regulation should be revised to add definitions of ``person-centered 
services'' or ``person-directed planning,'' because the intent of such 
processes is clear and we wish to provide flexibility in implementing 
the concepts. We wish to note there are numerous resources available 
that define ``person-centered planning'' and ``person-centered 
services'' to assist the States. There are also different models (for 
example, MAPS, PATH, ELP, Personal Futures Planning) of person-centered 
planning. According to one resource, (Schwartz, A.A., Jacobson, J.W., & 
Holburn, S. (2000)). Defining ``person-centeredness'': Results of two 
consensus methods. Education & Training in Mental Retardation & 
Developmental Disabilities), each model has a different emphasis and 
should be applied based on the needs of the individual. Furthermore, 
the authors indicate that all models share a common underlying set of 
eight basic characteristics. These characteristics include the 
following:
     The person's activities, services and supports are based 
on his or her dreams, interests, preferences, strengths, and capacities
     The person and people important to him or her are included 
in planning, and have the opportunity to exercise control and make 
informed decisions
     The person has meaningful choices, with decisions based on 
his or her experiences
     The person uses, when possible, natural and community 
supports
     Activities, supports and services foster skills to achieve 
personal relationships, community inclusion, dignity, and respect
     The person's opportunities and experiences are maximized, 
and flexibility is enhanced within existing regulatory and funding 
constraints
     Planning is collaborative, recurring, and involves an 
ongoing commitment to the person
     The person is satisfied with his or her activities, 
supports and services.
    Generally, any model for person-centered planning a State uses 
should be based on the wishes and needs of the individual. With respect 
to the concept of ``person-directed'' planning, we expect that 
participants will actually direct the service planning and budget 
development. We think this is an important aspect of person-centered 
planning in order to ensure that the resultant service and budget 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. We are available to provide 
information and technical assistance to any State that desires it.
    After consideration of public comments received, we are finalizing 
Sec.  441.450 with revision to the definition of individualized backup 
plan and addition of a definition of supports broker or consultant. We 
have also generally added ``representative'' throughout the 
regulations, as applicable.

Self-Direction: General (Sec.  441.452)

    We proposed that 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. We proposed that 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. We 
also proposed that the State's assessment of an individual's needs must 
form the basis of the level of services for which the individual is 
eligible and that nothing in the self-directed PAS State plan option 
would 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.
    Comment: One commenter requested that CMS recognize other delivery 
models as ``traditional'' besides ``agency-delivered'' services. This 
same commenter asked whether a State that offers home health services 
under its State plan could meet the requirement for a ``traditional'' 
service-delivery model under this rule. Finally, this commenter sought 
clarification on whether the requirement that States offer a ``non-
self-directed'' model refers only to the ``agency-delivered'' service 
model. Another commenter indicated that it is imperative that all 
participants retain the option to use the ``traditional'' service-
delivery system.
    Response: In the preamble to the proposed rule, we construed the 
``traditional'' service-delivery model to mean ``traditional agency-
delivered services'', i.e., the personal care and related services and 
section 1915(c) waiver services that are delivered by personnel hired, 
supervised, and managed by a home care or similar agency. We agree with 
the commenters that we should not limit the ``traditional'' delivery 
system to ``agency-delivered services'' and now construe 
``traditional'' delivery system to mean the delivery system that the 
State has in place to provide their State plan optional personal care 
services benefit or their section 1915(c) waiver services for 
individuals who are not self-directing their PAS under a section 
1915(j) State plan option.
    ``Personal care and related services'' as used in section 
1915(j)(4)(A) of the Act are those services that are included in the 
State's definition of its optional personal care services benefit and 
not other State plan services such as home health. We further note 
section 1915(j)(2)(C) of the Act already requires that participation in 
the self-directed PAS State plan option is voluntary. Also, the 
regulation at Sec.  441.456 permits participants to voluntarily 
disenroll from the self-directed PAS option. Finally, the regulation at 
Sec.  441.458 allows States to involuntarily disenroll participants. In 
the event of a voluntary or involuntary disenrollment,

[[Page 57862]]

participants must resume receiving traditional services to which they 
are eligible under the State plan personal care service benefit or a 
section 1915(c) waiver program.
    After consideration of the public comments received, we are 
finalizing Sec.  441.452 without revision.

Use of Cash (Sec.  441.454)

    We proposed that States have the option to disburse cash 
prospectively to participants self-directing their PAS, and further, 
that States must ensure compliance with all applicable Internal Revenue 
Service requirements; that participants, at their option, could use the 
financial management entity for some or all of the functions described 
in Sec.  441.484(c); and that States must make a financial management 
entity available to participants if they demonstrated, after additional 
counseling, information, training, or assistance, that they could not 
effectively manage the cash option.
    Comment: One commenter thought that allowing individuals who choose 
the cash option to perform tax-related reporting functions puts the 
individual at risk with the Internal Revenue Service (IRS). One 
commenter asserted that older persons and persons with disabilities are 
unlikely to be able to properly manage the quarterly IRS tax payments. 
One commenter suggested that the rule be revised to permit the State to 
require a participant to use the financial management services (FMS) 
entity for all or part of the functions described in Sec.  441.484(c). 
One commenter thought that making use of the FMS entity optional would 
add an additional administrative and cost burden to the States. Also, 
the commenter stated that it is unwise for CMS to allow the practice of 
the hours of needed PAS to be determined by the wage/pay needs of the 
provider of care rather than the hours of PAS actually needed by the 
individual.
    Response: On September 13, 2007, we released a State Medicaid 
Director Letter (SMDL07-013), with preprint, for the self-
directed PAS State plan option. In the preprint, we indicate that 
States must assure that all IRS requirements regarding payroll/tax 
filing functions will be followed, including when participants perform 
these functions themselves. In the regulation at Sec.  441.454, we 
require 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. We have 
revised the regulation at Sec.  441.454(b) to add a minimum list of the 
tax-related responsibilities that are required by the IRS because we 
believe these examples will help to illustrate some of the tax-related 
responsibilities that must be performed. We recognize that not all 
participants who select the cash option will have the interest or skill 
to bear these responsibilities, so the regulation at Sec.  441.454(c) 
notes that participants may use a FMS entity to perform some or all of 
the employer and tax-related functions. We disagree that the regulation 
should permit the State to require a participant to use an FMS entity 
if that individual has selected the cash option and have not changed 
the rule. The purpose of the self-directed service delivery model is to 
vest participants with the choice and authority over decisions about 
their PAS and budget purchases. Therefore, when participants who have 
selected the cash option also choose to perform some or all of their 
employer and tax-related functions, we intend for that decision to be 
respected. Thereafter, if participants experience difficulty in 
performing some or all of these functions, or no longer choose to 
perform them, the regulation at Sec.  441.454(c) permits participants 
to use the services of the FMS entity. We acknowledge that States who 
have not yet built an infrastructure to support this self-directed 
State pla