Instructions_TechnicalGuide_V3.7 CLEAN 3-1-24 (backup 3-7-2024 355pm) FINAL 6

[Medicaid] Home & Community Based Waiver Requests and Supporting Regulations; 42 CFR 440.180 and 441.300 - 441.310 (CMS-8003)

Instructions_TechnicalGuide_V3.7 CLEAN 3-1-24 (backup 3-7-2024 355pm) FINAL 6

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Instructions, Technical Guide
and Review Criteria
Release Date:
March 2024

Center for Medicaid and CHIP Services
Centers for Medicare & Medicaid Services
Department of Health and Human Services

1
Instructions: Version 3.7 HCBS Waiver Application

Table of Contents
Purpose.......................................................................................................................................... 21
Overview of the Section 1915(c) HCBS Waiver Authority ...................................................... 21
Version 3.7 HCBS Waiver Application .................................................................................... 22
Waiver Application Format: .................................................................................................. 22
Instructions – Overview ............................................................................................................ 23
Description of the Section 1915(c) HCBS Waiver Authority ...................................................... 23
Overview ................................................................................................................................... 23
Statutory Basis and Legislative History of the HCBS Waiver Authority ................................. 24
Principal Features of the HCBS Waiver Authority ................................................................... 24
Basic Framework ................................................................................................................... 24
Waiver Application Process .................................................................................................. 24
Waivers Granted .................................................................................................................... 25
Individuals Served by a Waiver............................................................................................. 25
Services Offered Under a Waiver .......................................................................................... 26
Exclusion of Room and Board............................................................................................... 26
Number of Waiver Participants ............................................................................................. 26
Service Plan ........................................................................................................................... 26
Participant Direction of Waiver Services .............................................................................. 27
Assuring Participant Health and Welfare .............................................................................. 27
Waiver Administration and Operation .................................................................................. 27
Participant Rights .................................................................................................................. 27
Cost Neutrality ....................................................................................................................... 28
Quality Improvement Strategy: Overview ................................................................................ 28
Waiver Assurances and Other Federal Requirements ............................................................... 28
Continuous Quality Improvement ............................................................................................. 30
Discovery ............................................................................................................................... 30
Remediation ........................................................................................................................... 31
Sampling Approach ............................................................................................................... 31
Roles and Responsibilities ..................................................................................................... 32
Comprehensive Quality Improvement Strategy –Displaying and Printing in the Web-Based
Application ............................................................................................................................ 33
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Instructions: Version 3.7 HCBS Waiver Application

Federal Administration of the HCBS Waiver Authority ........................................................... 33
HCBS Waiver Services, the ADA and Olmstead ..................................................................... 33
HCBS Waiver Resources on the Web ....................................................................................... 33
Version 3.7 HCBS Waiver Application Organization .................................................................. 34
Ongoing CMS Waiver Application Activities .......................................................................... 36
Implementation of the Web-Based Application .................................................................... 36
Additional Activities.............................................................................................................. 36
Waiver Application Submission Requirements, Processes and Procedures ................................. 36
Overview ................................................................................................................................... 36
Submission of Applications ...................................................................................................... 37
Making a Submission Using the Web-Based Application .................................................... 37
Making Changes to a Submitted Application ........................................................................ 37
CMS Waiver Review Process ................................................................................................... 38
Requesting Division Review ................................................................................................. 38
Policies Concerning New and Renewal Waiver Applications .................................................. 38
90-Day Clock ......................................................................................................................... 38
New Waiver Applications ..................................................................................................... 40
Special Considerations: Section 1915(c) Waivers that Operate with Concurrent Managed
Care ........................................................................................................................................ 40
Special Considerations: Section 1915(a) Authority Concurrently with a 1915(c) Waiver ... 41
New Waiver to Replace an Approved Waiver ...................................................................... 41
Renewal Applications ............................................................................................................ 42
Other Changes to Approved Waivers .................................................................................... 42
Extensions .............................................................................................................................. 44
Policies Concerning Waiver Amendments ............................................................................... 45
Related Topics ........................................................................................................................... 46
CMS Technical Assistance .................................................................................................... 46
Administrative Claiming ....................................................................................................... 46
Waiver Termination ............................................................................................................... 46
Post Approval Activities ............................................................................................................... 47
Overview ................................................................................................................................... 47
Annual Waiver Report .............................................................................................................. 47
Annual Report Form CMS-372(S) ........................................................................................ 48
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Instructions: Version 3.7 HCBS Waiver Application

Preparation and Submission of the Form CMS-372(S) Report ............................................. 49
WMS 372 Report Summary Section ..................................................................................... 49
WMS 372 Report Data Section ............................................................................................. 50
372 Report Quality Section ................................................................................................... 52
Review of the Annual Waiver CMS-372(S) Report .............................................................. 52
Ongoing CMS-State Dialogue During the Waiver Period ........................................................ 53
CMS Oversight of State Waiver Operations ............................................................................. 53
CMS Report to the State Prior to Waiver Renewal ................................................................... 53
Detailed Instructions for the Completion of the Version 3.7 1915(c) HCBS Waiver Application
....................................................................................................................................................... 54
Overview ................................................................................................................................... 54
Using the Application ................................................................................................................... 54
Overview ................................................................................................................................... 54
Application Format ................................................................................................................... 54
Detailed Instructions, Technical Guidance and Review Criteria .................................................. 57
Application for a §1915(c) Home and Community-Based Services Waiver ................................ 57
(Module 1) .................................................................................................................................... 57
Overview ................................................................................................................................... 57
1. Request Information.................................................................................................................. 57
Overview ................................................................................................................................... 57
Item 1-A: State....................................................................................................................... 57
Item 1-B: Waiver Title .......................................................................................................... 57
Item 1-C: Type of Request .................................................................................................... 58
Item 1-D: Type of Waiver ..................................................................................................... 58
Item 1-E.1: Proposed Effective Date ..................................................................................... 59
Item 1-E.2: Approved Effective Date .................................................................................... 59
Item 1-F. Level(s) of Care ..................................................................................................... 59
Item 1-G: Concurrent Operation with Other Programs ......................................................... 61
Item 1-H: Dual Eligibility for Medicaid and Medicare ......................................................... 62
2. Brief Waiver Description .......................................................................................................... 62
3. Components of the Waiver Request ......................................................................................... 62
4. Waiver(s) Requested ................................................................................................................. 63
Item 4-A: Comparability ........................................................................................................... 63
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Instructions: Version 3.7 HCBS Waiver Application

Item 4-B: Income and Resources for the Medically Needy ...................................................... 63
Item 4-C: Statewideness ............................................................................................................... 64
5. Assurances ................................................................................................................................ 66
Overview/Discussion ................................................................................................................ 66
6. Additional Requirements .......................................................................................................... 66
Overview ................................................................................................................................... 66
Discussion of Additional Requirements .................................................................................... 66
Item 6-A: Service Plan .......................................................................................................... 66
Item 6-B: Individuals Who Are Inpatients ............................................................................ 67
Item 6-C: Room and Board ................................................................................................... 68
Item 6-D: Access to Services................................................................................................. 68
Item 6-E: Free Choice of Provider ........................................................................................ 69
Item 6-F: FFP Limitation ....................................................................................................... 69
Item 6-G: Fair Hearing .......................................................................................................... 69
Item 6-H: Quality Improvement ............................................................................................ 69
Item 6-I: Public Input ............................................................................................................ 69
Item 6-J: Notice to Tribal Governments ................................................................................ 70
Item 6-K: Limited English Proficient Persons ...................................................................... 71
7. Contact Person(s) ...................................................................................................................... 71
Item 7-A: State Medicaid Agency Representative .................................................................... 71
Item 7-B: Operating Agency Representative ............................................................................ 71
8. Authorizing Signature ............................................................................................................... 71
Attachments (if applicable) ........................................................................................................... 72
Instructions: ........................................................................................................................... 72
Technical Guidance ................................................................................................................... 72
Instructions ............................................................................................................................ 72
Technical Guidance ............................................................................................................... 72
Appendix A: Waiver Administration and Operation .................................................................... 74
Brief Overview .......................................................................................................................... 74
Requirements: Waiver Administration and Operation .............................................................. 74
Detailed Instructions for Completing Appendix A ................................................................... 77
Item A-1: State Line of Authority for Waiver Operation ...................................................... 77
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Instructions: Version 3.7 HCBS Waiver Application

Item A-2: Medicaid Agency Oversight of Waiver Administration........................................... 78
Item A-2-a: Operation by a Division/Unit within the SMA other than the Medical Assistance
Unit. ....................................................................................................................................... 78
Item A-2-b: Operation by a non-SMA State Entity ............................................................... 79
Waiver Operational and Administrative Functions ................................................................... 80
Item A-3: Use of Contracted Entities ........................................................................................ 82
Instructions ............................................................................................................................ 82
Technical Guidance ............................................................................................................... 83
Item A-4: Role of Local/Regional Non-State Entities .............................................................. 84
Instructions ............................................................................................................................ 84
Technical Guidance ............................................................................................................... 84
Item A-5: Responsibility for Assessment of Performance of Contracted and/or Local/Regional
Non-State Entities ..................................................................................................................... 86
Instructions ............................................................................................................................ 86
Technical Guidance ............................................................................................................... 86
Item A-6: Assessment Methods and Frequency ........................................................................ 86
Instructions ............................................................................................................................ 86
Technical Guidance ............................................................................................................... 86
Item A-7: Distribution of Waiver Operational and Administrative Functions ......................... 87
Instructions ............................................................................................................................ 87
Technical Guidance ............................................................................................................... 87
CMS Review Criteria ............................................................................................................ 88
Quality Improvement: Administrative Authority of the Single State Medicaid Agency ......... 88
Instructions ............................................................................................................................ 88
Technical Guidance ............................................................................................................... 88
Appendix B: Participant Access and Eligibility ........................................................................... 89
Brief Overview .......................................................................................................................... 89
Appendix B-1: Specification of the Waiver Target Group(s) ....................................................... 90
Overview ................................................................................................................................... 90
Detailed Instructions for Completing Appendix B-1 ................................................................ 91
Item B-1-a: Target Group(s) .................................................................................................. 91
Item B-1-b: Additional Criteria ............................................................................................. 92
Item B-1-c: Transition of Individuals Affected by Maximum Age Limit ............................. 93
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Instructions: Version 3.7 HCBS Waiver Application

Appendix B-2: Individual Cost Limit ........................................................................................... 94
Overview ................................................................................................................................... 94
Detailed Instructions for Completing Appendix B-2 ................................................................ 95
Item B-2-a: Individual Cost Limit ......................................................................................... 95
Item B-2-b: Method of Implementation of the Individual Cost Limit .................................. 97
Item B-2-c: Participant Safeguards........................................................................................ 97
Appendix B-3: Number of Individuals Served ............................................................................. 98
Overview ................................................................................................................................... 98
Detailed Instructions for Completing Appendix B-3 ................................................................ 99
Item B-3-a: Unduplicated Number of Participants ................................................................ 99
Item B-3-b: Limitation on the Number of Participants Served at any Point in Tim ............. 99
Item B-3-c: Reserved Waiver Capacity ............................................................................... 100
Item B-3-d: Scheduled Phase-In or Phase-Out .................................................................... 101
Attachment #1 to Appendix B-3: Waiver Phase-In or Phase-Out Schedule ....................... 102
Item B-3-e: Allocation of Waiver Capacity ........................................................................ 103
Item B-3-f: Selection of Entrants to the Waiver .................................................................. 104
Appendix B-4: Medicaid Eligibility Groups Served in the Waiver ............................................ 105
Overview ................................................................................................................................. 105
Detailed Instructions for Completing Appendix B-4 .............................................................. 105
Item B-4-a: State Classification ........................................................................................... 105
Item B-4-b: Medicaid Eligibility Groups Served in the Waiver ......................................... 106
Appendix B-5: Post-Eligibility Treatment of Income ................................................................ 108
Overview ................................................................................................................................. 108
Post-Eligibility Treatment of Income: Overview .................................................................... 108
Allowances .......................................................................................................................... 109
Miller Trusts ........................................................................................................................ 110
General Guidance Concerning Completing Appendix B-5 ................................................. 111
Detailed Instructions for Completing Appendix B-5 .............................................................. 112
Item B-5-a: Use of Spousal Impoverishment Rules ............................................................ 112
Item B-5-b: Regular Post-Eligibility Treatment of Income: Section 1634 and SSI Criteria
State ..................................................................................................................................... 113
Item B-5-c: Regular Post-Eligibility Treatment of Income: Section 209(b) State .............. 114
Item B-5-d: Post-Eligibility Treatment of Income Using Spousal Impoverishment Rules . 114
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Instructions: Version 3.7 HCBS Waiver Application

Item B-5-e: Regular Post-Eligibility Treatment of Income: Section 1634 and SSI Criteria
State ..................................................................................................................................... 115
Item B-5-f: Regular Post-Eligibility Treatment of Income: Section 209(b) State .............. 116
Item B-5-g: Post-Eligibility Treatment of Income Using Spousal Impoverishment Rules . 116
Post Eligibility Treatment of Income Under Concurrent Waivers ...................................... 117
Appendix B-6: Evaluation/Reevaluation of Level of Care ......................................................... 118
Overview ................................................................................................................................. 118
Detailed Instructions for Completing Appendix B-6 .............................................................. 118
Item B-6-a: Reasonable Indication of Need for Services .................................................... 118
Item B-6-b: Responsibility for Performing Evaluations and Reevaluations ....................... 119
Item B-6-c: Qualifications of Individuals Performing Initial Evaluation............................ 120
Item B-6-d: Level of Care Criteria ...................................................................................... 120
Item B-6-e: Level of Care Instrument(s) ............................................................................. 121
Item B-6-f: Process for Level of Care Evaluation/ Reevaluation ........................................ 122
Item B-6-g: Re-evaluation Schedule ................................................................................... 122
Item B-6-h: Qualifications of Individuals Who Perform Re-evaluations............................ 123
Item B-6-i: Procedures to Ensure Timely Re-Evaluations .................................................. 123
Item B-6-j: Maintenance of Evaluation/Reevaluation Records ........................................... 124
Quality Improvement: Level of Care (LOC) Determination ..................................................... 124
Instructions .............................................................................................................................. 124
Technical Guidance ................................................................................................................. 125
Appendix B-7: Freedom of Choice ............................................................................................. 125
Overview ................................................................................................................................. 125
Detailed Instructions for Completing Appendix B-7 .............................................................. 126
Item B-7-a: Procedures ........................................................................................................ 126
Item B-7-b: Maintenance of Forms ..................................................................................... 126
Appendix B-8: Access to Services by Limited English Proficient Persons................................ 127
Overview ................................................................................................................................. 127
Detailed Instructions for Completing Appendix B-8 .............................................................. 127
Instructions .......................................................................................................................... 127
Technical Guidance ............................................................................................................. 127
Appendix C: Participant Services ............................................................................................... 127
Brief Overview ........................................................................................................................ 127
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Instructions: Version 3.7 HCBS Waiver Application

Web-Based Application .......................................................................................................... 127
Appendix C-1: Summary of Services Covered ....................................................................... 128
Overview ................................................................................................................................. 128
Detailed Instructions for Completing Appendix C-1 .............................................................. 128
Item C-1-a: Waiver Services Summary ............................................................................... 128
Item C-1-b. Alternate Provision of Case Management Services to Waiver Participants .... 130
Item C-1-c: Delivery of Case Management Services .......................................................... 131
Item C-1-d: Remote/Telehealth Delivery of Waiver Services ........................................... 132
Appendix C-2: General Service Specifications .......................................................................... 132
Overview ................................................................................................................................. 132
Detailed Instructions for Completing Appendix C-2 .............................................................. 132
Item C-2-a: Criminal History/Background Investigations .................................................. 132
Item C-2-b: Abuse Registry Screening ................................................................................ 133
Item C-2-c: Facilities Subject to Section 1616(e) of the Social Security Act ..................... 134
Discussion: Items C-2-d and C-2-e ..................................................................................... 134
Item C-2-d: Provision of Personal Care or Similar Services by Legally Responsible
Individuals ........................................................................................................................... 135
Item C-2-e: State Policies Concerning Payment for Waiver Services Furnished by Relatives/
Legal Guardians ................................................................................................................... 138
Item C-2-f: Open Enrollment of Providers .......................................................................... 140
Item C-2-g: State Option to Provide HCBS in Acute Care Hospitals ................................. 141
Quality Improvement: Qualified Providers ................................................................................ 142
Instructions .............................................................................................................................. 142
Technical Guidance ................................................................................................................. 143
Appendix C-3: Waiver Services Specifications .......................................................................... 143
Overview ................................................................................................................................. 143
Technical Guidance Concerning Service Coverage ................................................................ 144
Introduction ......................................................................................................................... 144
Requirements Concerning the Specification of the Scope of Services ............................... 144
Additional Considerations Concerning Service Coverage .................................................. 146
C. Relationship of Waiver Services to EPSDT Services ..................................................... 148
Detailed Instructions for Completing Appendix C-3 .............................................................. 153
Service Title ......................................................................................................................... 153
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Instructions: Version 3.7 HCBS Waiver Application

Carry Over Services............................................................................................................. 155
Service Definition ................................................................................................................ 155
Applicable Limits on Amount, Frequency, or Duration ...................................................... 156
Provider Specifications ........................................................................................................ 157
Provider Category(s)............................................................................................................ 157
Provision by Legally Responsible Persons or Relatives/Legal Guardians .......................... 158
Remote/Telehealth Delivery of Services ............................................................................. 158
Provider Qualifications ........................................................................................................ 158
Verification of Provider Qualifications ............................................................................... 160
Service Delivery Method ..................................................................................................... 160
Appendix C-4: Additional Limits on Amount of Waiver Services ............................................ 161
Overview ................................................................................................................................. 161
Types of Limits ....................................................................................................................... 162
Applicability ............................................................................................................................ 162
Basic Information Requirements ............................................................................................. 162
Additional Information Requirements .................................................................................... 163
Limit(s) on Set(s) of Waiver Services ................................................................................. 163
Prospective Individual Budget Amount .............................................................................. 163
Budget Limits by Level of Support ..................................................................................... 164
Other Type of Limit ............................................................................................................. 164
CMS Review Criteria .............................................................................................................. 164
Appendix C-5: Home and Community-Based Settings Requirements ....................................... 167
Overview ................................................................................................................................. 167
Instructions .......................................................................................................................... 167
Technical Guidance ............................................................................................................. 167
Settings that Isolate .............................................................................................................. 170
Attachment: Core Service Definitions ........................................................................................ 170
Overview ................................................................................................................................. 170
A. Statutory Services ............................................................................................................... 171
1. Case Management ............................................................................................................... 171
Core Service Definition ....................................................................................................... 172
2. Homemaker Services........................................................................................................... 173
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Instructions: Version 3.7 HCBS Waiver Application

Background .......................................................................................................................... 173
Core Service Definition ....................................................................................................... 173
3. Home Health Aide Services ................................................................................................ 173
Background .......................................................................................................................... 173
Core Service Definition ....................................................................................................... 173
Core Service Definition ....................................................................................................... 174
4. Personal Care....................................................................................................................... 174
Background .......................................................................................................................... 174
Core Service Definition ....................................................................................................... 175
Core Service Definition ....................................................................................................... 175
5. Adult Day Health ................................................................................................................ 177
Background .......................................................................................................................... 177
Core Service Definition ....................................................................................................... 177
Habilitation Services............................................................................................................ 177
6. Habilitation .......................................................................................................................... 178
Background .......................................................................................................................... 178
Core Service Definition ....................................................................................................... 178
7. Residential Habilitation ....................................................................................................... 178
Background .......................................................................................................................... 178
Core Service Definition ....................................................................................................... 178
8. Day Habilitation .................................................................................................................. 180
Background .......................................................................................................................... 180
Core Service Definition ....................................................................................................... 180
9. Education ............................................................................................................................. 181
Core Service Definition ....................................................................................................... 181
Instructions .......................................................................................................................... 182
Guidance .............................................................................................................................. 182
10. Prevocational Services ...................................................................................................... 182
Background .......................................................................................................................... 182
Core Service Definition ....................................................................................................... 182
11-a Supported Employment - Individual Supported Employment ........................................ 184
Background .......................................................................................................................... 184
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Instructions: Version 3.7 HCBS Waiver Application

Core Service Definition ....................................................................................................... 185
11-b Supported Employment – Small Group Employment Support....................................... 187
Background .......................................................................................................................... 187
Core Service Definition ....................................................................................................... 187
12. Respite Care ...................................................................................................................... 189
Background .......................................................................................................................... 189
Core Service Definition ....................................................................................................... 189
Mental Health Services ........................................................................................................ 190
13. Day Treatment ................................................................................................................... 190
Background .......................................................................................................................... 190
Core Service Definition ....................................................................................................... 190
Core Service Definition ....................................................................................................... 191
Instructions .......................................................................................................................... 191
14. Psychosocial Rehabilitation Services ................................................................................ 192
Background .......................................................................................................................... 192
Core Service Definition ....................................................................................................... 192
Core Service Definition ....................................................................................................... 192
15. Clinic Services................................................................................................................... 193
Background .......................................................................................................................... 193
Core Service Definition ....................................................................................................... 193
Core Service Definition ....................................................................................................... 193
16. Live-in Caregiver .............................................................................................................. 194
Background .......................................................................................................................... 194
Core Service Definition ....................................................................................................... 194
B. Other Services..................................................................................................................... 195
1. Home Accessibility Adaptations (a.k.a., environmental accessibility adaptations)............ 195
Background .......................................................................................................................... 195
2. Vehicle Modifications ......................................................................................................... 196
Background .......................................................................................................................... 196
Core Service Definition ....................................................................................................... 196
3. Non-Medical Transportation ............................................................................................... 197
Background .......................................................................................................................... 197
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Instructions: Version 3.7 HCBS Waiver Application

Core Service Definition ....................................................................................................... 197
4. Specialized Medical Equipment and Supplies .................................................................... 198
Background .......................................................................................................................... 198
Core Service Definition ....................................................................................................... 198
5. Assistive Technology .......................................................................................................... 199
Background .......................................................................................................................... 199
Core Service Definition ....................................................................................................... 199
6. Personal Emergency Response System (PERS).................................................................. 200
Background .......................................................................................................................... 200
Core Service Definition ....................................................................................................... 200
7. Community Transition Services .......................................................................................... 200
Background .......................................................................................................................... 200
Core Service Definition ....................................................................................................... 200
8. Skilled Nursing.................................................................................................................... 201
Background .......................................................................................................................... 201
Core Service Definition ....................................................................................................... 201
9. Private Duty Nursing ........................................................................................................... 202
Background .......................................................................................................................... 202
Core Service Definition ....................................................................................................... 202
10. Adult Foster Care .............................................................................................................. 203
Background .......................................................................................................................... 203
Core Service Definition ....................................................................................................... 203
11. Assisted Living Services ................................................................................................... 204
Background .......................................................................................................................... 204
Core Service Definition ....................................................................................................... 204
12. Chore Services................................................................................................................... 206
Background .......................................................................................................................... 206
Core Service Definition ....................................................................................................... 206
13. Adult Companion Services ............................................................................................... 206
Background .......................................................................................................................... 206
Core Service Definition ....................................................................................................... 206
14. Training and Counseling Services for Unpaid Caregivers ................................................ 207
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Instructions: Version 3.7 HCBS Waiver Application

Background .......................................................................................................................... 207
Core Service Definition ....................................................................................................... 207
15. Consultative Clinical and Therapeutic Services................................................................ 207
Background .......................................................................................................................... 207
Core Service Definition ....................................................................................................... 207
16. Individual Directed Goods and Services ........................................................................... 208
Background .......................................................................................................................... 208
Core Service Definition ....................................................................................................... 208
17. Bereavement Counseling .................................................................................................. 209
Background .......................................................................................................................... 209
Core Service Definition ....................................................................................................... 209
18. Career Planning ................................................................................................................. 209
Background .......................................................................................................................... 209
Core Service Definition ....................................................................................................... 209
19. Assistance in Community Integration – Housing Supports........................................... 211
Background .......................................................................................................................... 211
Core Service Definition ....................................................................................................... 211
C. Extended State Plan Services ............................................................................................. 212
Discussion ............................................................................................................................ 212
Core Service Definition ....................................................................................................... 212
D. Services in Support of Participant Direction ...................................................................... 213
Discussion ............................................................................................................................ 213
1. Information and Assistance in Support of Participant Direction (Supports Brokerage) ..... 213
Background .......................................................................................................................... 213
2. Financial Management Services.......................................................................................... 214
Background .......................................................................................................................... 214
Core Service Definition ....................................................................................................... 214
Appendix D: Participant-Centered Planning and Service Delivery ............................................ 216
Brief Overview ........................................................................................................................ 216
Appendix D-1: Service Plan Development ................................................................................. 216
Background ............................................................................................................................. 216
Detailed Instructions for Completing Appendix D-1 .............................................................. 217
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Instructions: Version 3.7 HCBS Waiver Application

Service Plan Title................................................................................................................. 217
Item D-1-a: Responsibility for Service Plan Development ................................................. 217
Item D-1-b: Service Plan Development Safeguards ............................................................ 218
Item D-1-c: Supporting the Participant in Service Plan Development ................................ 219
Item D-1-d-i. Service Plan Development Process ............................................................... 220
D-1-d-ii. HCBS Settings Requirements for the Service Plan .............................................. 221
Item D-1-e. Risk Assessment and Mitigation ...................................................................... 222
Item D-1-f: Informed Choice of Providers .......................................................................... 223
Item D-1-g: Process for Making Service Plan Subject to the Approval of the Medicaid
Agency ................................................................................................................................. 224
Item D-1-h: Service Plan Review and Update..................................................................... 224
Item D-1-i: Maintenance of Service Plan Forms ................................................................. 225
Appendix D-2: Service Plan Implementation and Monitoring ................................................... 225
Background ............................................................................................................................. 225
Detailed Instructions for Completing Appendix D-2 .............................................................. 226
Item D-2-a: Service Plan Implementation and Monitoring ................................................. 226
Item D-2-b: Monitoring Safeguards .................................................................................... 227
Quality Improvement: Service Plan ....................................................................................... 228
Instructions .......................................................................................................................... 228
Technical Guidance ............................................................................................................. 229
Appendix E: Participant Direction of Services ........................................................................... 229
Brief Overview ........................................................................................................................ 229
Overview: Participant Direction of Waiver Services .............................................................. 230
Participant Choice................................................................................................................ 230
Geographic Limitation ......................................................................................................... 231
Service Specifications.......................................................................................................... 231
Participant Direction Opportunities ..................................................................................... 231
Supports for Participant Direction ....................................................................................... 231
Detailed Instructions for Completing Appendix E .................................................................. 232
Appendix E: Initial Section ................................................................................................. 232
Appendix E-1: Overview ............................................................................................................ 233
Detailed Instructions for Completing Appendix E-1 .............................................................. 233
Item E-1-a: Description of Participant Direction ................................................................ 233
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Instructions: Version 3.7 HCBS Waiver Application

Item E-1-b: Participant Direction Opportunities ................................................................. 234
Item E-1-c: Availability of Participant Direction by Type of Living Arrangement ............ 235
Item E-1-d: Election of Participant-Direction ..................................................................... 236
Item E-1-e: Information Furnished to Participants .............................................................. 237
Item E-1-f: Participant Direction by a Representative ........................................................ 238
Item E-1-g: Participant Directed Services ........................................................................... 239
Overview: Financial Management Services ........................................................................ 239
Purchase of Certain Goods and Services through an FMS Entity ....................................... 242
Item E-1-h: Financial Management Services ...................................................................... 243
Item E-1-i: Provision of Financial Management Services................................................... 244
Information and Assistance in Support of Participant Direction: Overview ....................... 247
Item E-1-j: Information and Assistance in Support of Participant Direction ...................... 247
Item E-1-k: Independent Advocacy ..................................................................................... 249
Item E-1-l: Voluntary Termination of Participant Direction ............................................... 250
Item E-1-m: Involuntary Termination of Participant Direction .......................................... 251
Item E-1-n: Goals for Participant-Direction ........................................................................ 252
Appendix E-2: Opportunities for Participant Direction .............................................................. 252
Overview of Topics Addressed in Appendix E-2 ................................................................... 252
Detailed Instructions for Completing Appendix E-2 .............................................................. 252
Item E-2-a: Participant – Employer Authority .................................................................... 252
Item E-2-a-i: Participant Employer Status........................................................................... 252
Item E-2-a-ii. Participant Decision Making Authority ........................................................ 253
Item E-2-b: Participant – Budget Authority ........................................................................ 255
Item E-2-b-i: Participant Decision Making Authority ......................................................... 255
Item E-2-b-iii. Informing Participant of Budget Amount.................................................... 257
Item E-2-b-iv. Participant Exercise of Budget Flexibility ................................................... 257
Item E-2-b-v: Expenditure Safeguards ................................................................................ 258
Appendix F: Participant Rights................................................................................................... 259
Brief Overview ........................................................................................................................ 259
Appendix F-1: Opportunity to Request a Fair Hearing ........................................................... 259
Detailed Instructions for Completing Appendix F-1 .............................................................. 259
Process for Offering Opportunity to Request a Fair Hearing .............................................. 259
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Instructions: Version 3.7 HCBS Waiver Application

Appendix F-2: Additional Dispute Resolution Process .............................................................. 261
Overview ................................................................................................................................. 261
Detailed Instructions for Completing Appendix F-2 .............................................................. 261
Item F-2-a: Availability of Additional Dispute Resolution Process.................................... 261
Item F-2-b: Description of Additional Dispute Resolution Process .................................... 262
Appendix F-3: State Grievance/Complaint System .................................................................... 262
Overview ................................................................................................................................. 262
Detailed Instructions for Completing Appendix F-3 .............................................................. 263
Item F-3-a: Operation of Grievance/Complaint System...................................................... 263
Item F-3-b: Operational Responsibility ............................................................................... 263
Item F-3-c: Description of System ...................................................................................... 263
Appendix G: Participant Safeguards ........................................................................................... 264
Brief Overview ........................................................................................................................ 264
Appendix G-1: Response to Critical Events or Incidents ........................................................... 264
Overview ................................................................................................................................. 264
Detailed Instructions for Completing Appendix G-1 .............................................................. 264
Item G-1-a: Critical Event or Incident Reporting and Management Process .................... 264
Item G-1-b: State Critical Event or Incident Reporting Requirements ............................... 265
Item G-1-c: Participant Training and Education ................................................................. 265
Item G-1-d: Responsibility for Review of and Response to Critical Events or Incidents ... 266
Item G-1-e. Responsibility for Oversight of Critical Incidents and Events ....................... 267
Appendix G-2: Safeguards Concerning Restraints and Restrictive Interventions ...................... 268
Overview ................................................................................................................................. 268
Detailed Instructions for Completion of Appendix G-2 ......................................................... 269
Item G-2-a: Use of Restraints .............................................................................................. 269
Item G-2-a-i: Safeguards Concerning the Use of Restraints ............................................... 269
Item G-2-a-ii: State Oversight Responsibility ..................................................................... 270
Item G-2-b: Use of Restrictive Interventions ...................................................................... 271
Item G-2-b-i: Safeguards Concerning the Use of Restrictive Interventions ....................... 272
Item G-2-b-ii: State Oversight Responsibility ..................................................................... 273
Item G-2-c: Use of Seclusion .............................................................................................. 274
Item G-2-c-i: Safeguards Concerning the Use of Seclusion................................................ 275
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Item G-2-c-ii: State Oversight Responsibility ..................................................................... 276
Appendix G-3: Medication Management and Administration ................................................... 277
Overview ................................................................................................................................. 277
Detailed Instructions for Completing Appendix G-3 .............................................................. 277
Item G-3-a: Applicability .................................................................................................... 277
Item G-3-b: Medication Management and Follow-Up ........................................................ 277
Item G-3-b-i: Responsibility ................................................................................................ 278
Item G-3-b-ii: State Oversight and Follow-up .................................................................... 278
Item G-3-c: Medication Administration by Waiver Providers ............................................ 279
Item G-3-c.i: Provider Administration of Medications ....................................................... 279
Item G-3-c.ii: State Policy ................................................................................................... 279
Item G-3-c.iii: Medication Error Reporting ........................................................................ 280
Item G-3-c.iv: State Oversight Responsibility .................................................................... 281
Quality Improvement: Health and Welfare ............................................................................. 281
Instructions .......................................................................................................................... 282
Appendix H: Systems Improvement .......................................................................................... 282
Quality Improvement Strategy ................................................................................................ 282
General Instructions ............................................................................................................. 283
Quality Improvement Strategy: Systems Improvement .......................................................... 284
Detailed Instructions for Completing Appendix H ................................................................. 285
Instructions .......................................................................................................................... 285
QIS Processes to Establish Priorities, Develop, and Assess System Improvements ............. 285
Instructions .......................................................................................................................... 285
Technical Guidance ............................................................................................................. 285
Compilation and Communication of Quality Improvement Information ............................... 286
Instructions .......................................................................................................................... 286
Technical Guidance ............................................................................................................. 286
Periodic Evaluation and Revision of the QIS.......................................................................... 286
Instructions .......................................................................................................................... 286
Technical Guidance ............................................................................................................. 287
Appendix I: Financial Accountability ......................................................................................... 287
Brief Overview ........................................................................................................................ 287
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Appendix I-1: Financial Integrity and Accountability ................................................................ 288
Detailed Instructions for Completing Appendix I-1 ............................................................... 288
Instructions .......................................................................................................................... 288
Technical Guidance ............................................................................................................. 288
Quality Improvement: Financial Accountability.................................................................... 290
Instructions .......................................................................................................................... 290
Appendix I-2: Rates, Billing and Claims .................................................................................... 291
Overview ................................................................................................................................. 291
Detailed Instructions for Completing Appendix I-2 ............................................................... 291
Item I-2-a: Rate Determination Methods............................................................................. 291
Item I-2-b: Flow of Billings................................................................................................. 294
Item I-2-c: Certifying Public Expenditures ......................................................................... 295
Item I-2-d: Billing Validation Process................................................................................. 296
Item I-2-e: Billing and Claims Record Maintenance Requirement ..................................... 297
Appendix I-3: Payment ............................................................................................................... 297
Overview ................................................................................................................................. 297
Detailed Instructions for Completing Appendix I-3 ............................................................... 297
Item I-3-a: Method of Payment -- MMIS ............................................................................ 297
Item I-3-b: Direct Payment .................................................................................................. 298
Item I-3-c: Supplemental or Enhanced Payments ............................................................... 299
Item I-3-d: Payments to State or Local Government Providers .......................................... 300
Item I-3-e: Amount of Payment to State or Local Government Providers .......................... 300
Instructions .......................................................................................................................... 300
Technical Guidance ............................................................................................................. 300
Item I-3-f: Provider Retention of Payments ........................................................................ 301
Item I-3-g: Additional Payment Arrangements ................................................................... 302
Item I-3-g-i: Voluntary Reassignment of Payments to a Governmental Agency................ 302
Technical Guidance ............................................................................................................. 302
Item I-3-g-ii: Organized Health Care Delivery System....................................................... 302
Item I-3-g-iii: Contracts with MCOs, PIHPs or PAHPs ...................................................... 304
Appendix I-4: Non-Federal Matching Funds .............................................................................. 305
Overview ................................................................................................................................. 305
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Detailed Instructions for Completing Appendix I-4 ............................................................... 306
Item I-4-a: State Government Level Source(s) of the Non-Federal Share of Computable
Waiver Costs........................................................................................................................ 306
Item I-4-b: Local Government or Other Source(s) of the Non-Federal Share of Computable
Waiver Costs........................................................................................................................ 307
Item I-4-c: Information Concerning Certain Sources of Funds ........................................... 307
Appendix I-5: Exclusion of Medicaid Payment for Room and Board........................................ 308
Overview ................................................................................................................................. 308
Detailed Instructions for Completing Appendix I-5 ............................................................... 308
Item I-5-a: Services Furnished in Residential Settings ....................................................... 308
Item I-5-b: Method for Excluding the Cost of Room and Board Furnished in Residential
Settings ................................................................................................................................ 308
Appendix I-6: Payment for Rent and Food Expenses of an Unrelated Live-In Caregiver ......... 309
Overview ................................................................................................................................. 309
Completion of Appendix I-6 ................................................................................................... 309
Instructions .......................................................................................................................... 309
Technical Guidance ............................................................................................................. 309
Appendix I-7: Participant Co-Payments for Waiver Services and Other Cost Sharing ............. 310
Overview ................................................................................................................................. 310
Detailed Instructions for Completing Appendix I-7 ............................................................... 310
Item I-7-a: State Requirement for Co-pays ......................................................................... 311
Item I-7-a-i: Co-Pay Arrangement ...................................................................................... 311
Item I-7-a-ii: Participants Subject to Co-pay Charges for Waiver Services........................ 311
Item I-7-a-iii: Amount of Co-Pay Charges for Waiver Services ........................................ 311
Item I-7-a-iv: Cumulative Maximum Charges ................................................................... 311
Item I-7-b: Other State Requirement for Cost Sharing........................................................ 312
Appendix J: Cost Neutrality Demonstration ............................................................................... 313
Brief Summary ........................................................................................................................ 313
Cost Neutrality Formula .......................................................................................................... 313
Appendix J-1: Composite Overview and Demonstration of Cost-Neutrality Formula .............. 315
Overview ................................................................................................................................. 315
Detailed Instructions for Completion of Appendix J-1 ........................................................... 315
Instructions .......................................................................................................................... 315
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Technical Guidance ............................................................................................................. 315
Appendix J-2 - Derivation of Estimates...................................................................................... 316
Overview ................................................................................................................................. 316
Detailed Instructions for Completing Appendix J-2 ............................................................... 316
Item J-2-a: Number of Unduplicated Participants Served ................................................... 316
Item J-2-b: Average Length of Stay .................................................................................... 317
Item J-2-c: Derivation of Estimates of Each Factor ............................................................ 318
Item J-2-c-i: Factor D Derivation ........................................................................................ 318
Item J-2-c-iii: Factor G Derivation ...................................................................................... 320
Item J-2-c-iv: Factor G' Derivation ..................................................................................... 321
Item J-2-d: Estimate of Factor D ......................................................................................... 322
J-2-d-i: Non-Concurrent Waivers ........................................................................................ 322
J-2-d-ii: Concurrent Waivers ............................................................................................... 323
Glossary of Terms and Abbreviations ........................................................................................ 324
Index to the Application and Instructions ................................................................................... 359

Purpose
These instructions provide information to assist states in completing the Version 3.7 Application
for a section1915(c) Home and Community-Based Services (HCBS) Waiver, released January
2024.
The instructions include technical guidance to aid states in designing an HCBS waiver. This
guidance is intended to improve understanding of applicable federal policies and their
implications for the design and operation of an HCBS waiver. Finally, the instructions
incorporate the review criteria that the Centers for Medicare & Medicaid Services (CMS) uses in
order to determine whether a waiver meets applicable statutory, regulatory and other
requirements. Publishing these criteria is intended to assist states in clearly understanding CMS
expectations concerning the content of HCBS waiver applications.
It is not the purpose of the instructions to prescribe how a state should design its waiver.
Instead, the instructions are solely intended to provide information to assist states in the design of
waivers and completing the waiver application.
Overview of the Section 1915(c) HCBS Waiver Authority
Operating a program of services under the authority of section 1915(c) of the Social Security Act
permits a state to waive certain Medicaid requirements in order to furnish an array of home and
community-based services that promote community living for Medicaid beneficiaries and,
thereby, avoid institutionalization. Waiver services complement and/or supplement the services
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Instructions: Version 3.7 HCBS Waiver Application

that are available through the Medicaid State plan and other federal, state and local public
programs as well as the supports that families and communities provide to individuals.
States have flexibility in designing waivers, including the latitude to:
•

Determine the target group(s) of Medicaid beneficiaries who are served through the
waiver;

•

Specify the services that are furnished to support waiver participants in the community;

•

Incorporate opportunities for participants to direct and manage their waiver services;

•

Determine the qualifications of waiver providers;

•

Design strategies to assure the health and welfare of waiver participants;

•

Manage a waiver to promote the cost-effective delivery of home and community-based
services;

•

Link the delivery of waiver services to other state and local programs and their associated
service delivery systems; and

•

Develop and implement a quality improvement strategy to ensure that the waiver meets
essential federal statutory assurances and to continuously improve the effectiveness of the
waiver in meeting participant needs.

The next section provides a more complete description of the HCBS waiver authority and its
principal features.
CMS recognizes that the design and operational features of an HCBS waiver will vary depending
on the specific needs of the target population, the resources available to a state, service delivery
system structure, state goals and objectives, and other factors.
Version 3.7 HCBS Waiver Application
The Version 3.7 HCBS Waiver Application is available for state use upon release. The revised
application reflects current federal policy regarding the operation of HCBS waivers and is
designed to ensure that the application includes the full range of information that CMS requires
in order to review and take action on a state’s request to operate an HCBS waiver. See Version
3.7 HCBS Waiver Application Organization for additional information concerning the revised
application.
Waiver Application Format:
Since November 2006, CMS has offered a web-based version of the application, currently at
https://wms-mmdl.cms.gov/WMS/faces/portal.jsp. The web-based application has streamlined
the preparation of waiver applications and amendments as well as improved the exchange of
information between states and CMS concerning waiver requests.
CMS requires states to employ the web-based application to submit new waivers, waiver
renewals, and amendments. The web-based application format contains separate technical
directions for its use. In addition, the web-based application is linked to pertinent elements of
these instructions. Please see Waiver Application Submission Requirements, Process and
Procedures for more information about the web-based application.

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Instructions: Version 3.7 HCBS Waiver Application

Instructions – Overview
The instructions contain the following major sections:
•

•

•
•

Description of the Section 1915(c) HCBS Waiver Authority provides an overview of the
HCBS waiver program, including its statutory basis and principal features and
information about where to locate resources that may assist states in designing and
operating an HCBS waiver;
Waiver Application Submission Requirements, Processes, and Procedures furnishes
information and technical guidance concerning the submission of waiver applications and
amendments to approved waivers, including use of the web-based format. This section
also includes the timelines that CMS must meet in taking action on state waiver
submissions, and directions;
Post Approval Activities summarizes federal and state activities and processes that are
undertaken during the period that a waiver is in effect, including state submission of
annual waiver reports and CMS waiver review procedures;
Detailed Instructions for Completing the Version 3.7 Section 1915(c) Waiver
Application includes detailed item-by-item instructions for completing the application
along with technical guidance to assist states in designing and operating a waiver and the
criteria that CMS applies when reviewing each element of a waiver application;
Glossary of Terms and Abbreviations provides definitions of the key terms and
frequently used abbreviations that appear in the application and the instructions; and
Index to Application and Instructions cross-references topics between the application
and the instructions.

In addition, the following Resource Attachments accompany the instructions.
•
•
•

•

Attachment A: Section 1915(c) of the Social Security Act contains the full text of the
federal law that authorizes the HCBS waiver program;
Attachment B: Federal Regulations Related to the Operation of HCBS Waivers
compiles selected federal Medicaid regulations that pertain to the operation of HCBS
waivers;
Attachment C: Selected State Medicaid Director Letters Concerning HCBS Waivers
and Other Materials compiles letters issued to State Medicaid Directors by the Center
for Medicaid and CHIP Services (CMCS) regarding topics that pertain to the HCBS
waiver program. The attachment also includes additional CMS and other reference
materials that may prove useful in designing a waiver or completing the waiver
application; and
Attachment D: Sampling Guide

Description of the Section 1915(c) HCBS Waiver Authority
Overview
This section provides a summary description of the HCBS waiver program, including its
statutory basis and principal features. It also identifies the CMS organizations and units that are
responsible for the administration of the waiver program and web-accessible resources that may
assist states in designing and operating HCBS waivers.

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Instructions: Version 3.7 HCBS Waiver Application

Statutory Basis and Legislative History of the HCBS Waiver Authority
Section1915(c) of the Social Security Act (“the Act”) authorizes the Secretary of Health and
Human Services (HHS) to waive certain specific Medicaid statutory requirements so that a state
may offer home and community-based services to state-specified target group(s) of Medicaid
beneficiaries who need a level of institutional care that is provided under the Medicaid State
plan. This provision was added to the Act by section 2176 of P.L. 97-35 (Omnibus Budget
Reconciliation Act (OBRA) of 1981) and subsequently has been amended by P.L. 99-272,
(Consolidated Omnibus Reconciliation Act (COBRA) of 1985), P.L. 99-509 (OBRA 1986), P.L.
100-203 (OBRA 1987), P.L. 100-360 (Medicare Catastrophic Coverage Act of 1988), P.L. 100647 (Technical and Miscellaneous Revenue Act), P.L. 101-508 (OBRA 1990), and section 4743
of P.L. 105-33 (Balanced Budget Act of 1997 – BBA-97). Attachment B to these instructions
contains the full text of section 1915(c) of the Act, as amended.
Prior to the enactment of section1915(c) of the Act, the Medicaid program provided for little in
the way of coverage for long term services and supports in non-institutional settings but offered
full or partial coverage of institutional care. Section 1915(c) was enacted to enable states to
address the needs of individuals who would otherwise receive costly institutional care by
furnishing cost-effective services to assist them to remain in their homes and communities.
Section 6086 of the Deficit Reduction Act of 2005 (P.L. 109-171) added §1915(i) to Act.
Effective January 1, 2007, states have the option to cover, under the Medicaid State plan, any or
all of the home and community-based services that are specifically listed in section
1915(c)(4)(B), not including “other services”, to Medicaid eligible individuals who meet certain
requirements. This option does not entail applying for a waiver (but it does require submitting a
state plan amendment) and it does not include the requirement that beneficiaries require an
institutional level of care in order to receive home and community-based services. The section
1915(i) authority provides an additional avenue for states to support individuals in the
community. A state may employ both the sections 1915(c) and 1915(i) authorities to fashion a
comprehensive approach to the delivery of home and community-based services. The enactment
of the section 1915(i) authority did not alter the 1915(c)waiver authority. Further guidance
regarding the 1915(i) state plan HCBS authority is available at
https://www.medicaid.gov/medicaid/home-community-based-services/home-community-basedservices-authorities/home-community-based-services-1915i/index.html.
Principal Features of the HCBS Waiver Authority
Basic Framework
The HCBS waiver authority permits a state to offer home and community-based services to
individuals who: (a) are found to require a level of institutional care (hospital, nursing facility, or
Intermediate Care Facility for Individuals with Intellectual Disabilities (ICF/IID)) under the State
plan; (b) are members of a target group that is included in the waiver; (c) meet applicable
Medicaid financial eligibility criteria; (d) require one or more waiver services in order to
function in the community; and, (e) exercise freedom of choice by choosing to enter the waiver
in lieu of receiving institutional care. It is entirely a state option to offer waiver services through
its Medicaid program.
Waiver Application Process
In order to launch an HCBS waiver, a state must submit an initial waiver application to CMS,
pursuant to 42 CFR § 441.301. The application describes the proposed waiver’s design and must
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Instructions: Version 3.7 HCBS Waiver Application

include sufficient information to permit CMS (acting on behalf of the Secretary of Health and
Human Services) to determine that the waiver meets applicable statutory and regulatory
requirements, especially the assurances specified in 42 CFR § 441.302. Continuation of a waiver
beyond its initial three-year approval period requires that the state submit a five-year waiver
renewal application and a determination by CMS that, while the waiver has been in effect, the
state has satisfactorily met the waiver assurances and other federal requirements, including the
submission of mandatory annual waiver reports (the CMS-372(S) report). Each subsequent
renewal of the waiver also requires the submission of a renewal application and a CMS
determination that the state has continued to meet federal requirements.
The approved waiver application specifies the operational features of the waiver. A state must
implement the waiver as specified in the approved application. If the state wants to change the
waiver while it is in effect, it must submit an amendment to CMS for its review and approval. All
requests for new waivers, waiver renewals and amendments must be submitted by the state
Medicaid agency. There is no limit on the number of HCBS waivers that a state may operate.
Waivers Granted
Section 1915(c) of the Act permits the Secretary of Health and Human Services to grant waivers
of three provisions of the Act so that a state may operate an HCBS waiver:
Section 1902(a)(10)(B) (Comparability). Waiver of this provision of the Act permits a state to
limit the provision of HCBS waiver services to Medicaid beneficiaries who require the level of
care in an institutional setting and are in the target group(s) specified in the waiver, as well as
offer services to waiver participants that are not provided to other Medicaid beneficiaries. All
HCBS waivers operate under a waiver of this statutory provision;
Section 1902(a)(1) (Statewideness). The Secretary may grant a waiver of this provision of the
Act in order to permit a state to limit the operation of a waiver to specified geographic areas of
the state; and
Section 1902(a)(10)(C)(i)(III) (Income and Resources for the Medically Needy). A State may
request a waiver of this provision in order to apply institutional income and resource “eligibility”
rules for medically needy in the community who otherwise qualify for waiver services.
Section 1915(c) does not give the Secretary the authority to waive any other provisions of the
Act. Therefore, all other pertinent Medicaid statutory requirements apply to the operation of a
waiver. By proposing to operate an HCBS waiver concurrently with another authority such as a
section 1915(b) waiver, a state may obtain waivers of certain additional provisions of the Act.
Individuals Served by a Waiver
In its application, a state must specify the group or groups of Medicaid beneficiaries who are
served through the HCBS waiver, pursuant to 42 CFR § 441.301. This specification has three
dimensions. First, a state must specify the level or levels of institutional care that individuals
must need in order to be considered for entrance into the waiver. For example, a waiver may
target persons who require the nursing facility level of care. Second, a state must select the
specific target group (e.g., the “aged”) that the waiver will serve from among the three basic
groups that are specified in the waiver regulations. A state may further specify the waiver target
group by age, condition and/or other factors. Lastly, a state must identify the Medicaid
eligibility groups (e.g., Supplemental Security Income (SSI) recipients) to which waiver services
are furnished. These groups may include some or all of the eligibility groups that are included in
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Instructions: Version 3.7 HCBS Waiver Application

the Medicaid State plan. Also, a state may elect to apply more generous “institutional eligibility”
rules to certain persons in the community to secure Medicaid eligibility on the same footing as
persons who elect to receive institutional services.
Waivers target many types of Medicaid beneficiaries, including older persons, individuals who
have experienced a brain injury, children with mental illness, children and adults with
developmental disabilities, persons with physical and other disabilities, persons living with
AIDS, and others.
Services Offered Under a Waiver
A state must specify the services that are furnished through the waiver, pursuant to 42 CFR §
441.301(b)(4). The state may include the services that are specifically enumerated in section
1915(c) of the Act and/or propose to offer other services that assist individuals to remain in the
community and avoid institutionalization. Waiver services complement the services that a state
offers under its state plan. Waiver participants must have full access to State plan services,
including Early and Periodic Screening, Diagnosis and Treatment (EPSDT) services when
children participate in a waiver. Through a waiver, a state may also furnish “extended state plan
services” that exceed the limits that apply under the state plan. There is no limit on the number
of services that a state may offer in a waiver nor are states required to include specific services in
the waiver.
In its application, a state must specify the scope and nature of each waiver service and any limits
on amount, frequency and duration that the state elects to apply to a service. Also, the state must
specify the qualifications of the individuals or agencies that furnish each waiver service.
Exclusion of Room and Board
Except in limited circumstances, a state may not claim federal financial participation (FFP) for
the costs of the room and board expenses of waiver participants. Room and board expenses must
be met from participant resources or through other sources.
Number of Waiver Participants
In its application, a state must specify the unduplicated number of individuals that the state
intends to serve each year the waiver is in effect, pursuant to 42 CFR § 441.303(f)(6). It is up to
the state to determine this number, based on the resources that the state has available to
underwrite the costs of waiver services. As state resources permit, this number may be modified
by amendment while the waiver is in effect.
Service Plan
The waiver services that an individual will receive must be incorporated into a written personcentered service plan ( all references throughout this document to “plan of care” or “service
plan” refer to the person-centered service plan described under 42 CFR § 441.301(c)(2)). A state
may claim FFP only for the waiver services that have been authorized in the participant’s service
plan. The service plan must also include the non-waiver services and supports that are used to
meet the needs of the participant in the community. In its application, the state must specify how
the service plan is developed, including how the plan addresses potential risks to the individual.
Effective service plan development processes are essential in order to ensure that waiver
participants will receive the services and supports that they need in order to function successfully
in the community and to assure their health and welfare. Monitoring the implementation of the
service plan is also a critical waiver operational activity.
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Instructions: Version 3.7 HCBS Waiver Application

Participant Direction of Waiver Services
A state may provide that the waiver participant (or the participant’s representative) may direct
and manage some or all of their waiver services. Participant direction may take a variety of
forms, including the participant’s employing and directly supervising community support
workers and exercising decision-making authority over an amount of waiver funds (the
participant-directed budget). When a waiver provides for participant direction, the state is
expected to make supports available to the participant as necessary to facilitate participant
direction.
Assuring Participant Health and Welfare
A waiver’s design must provide for continuously and effectively assuring the health and welfare
of waiver participants, pursuant to 42 CFR § 441.302(a). Processes that are important for
assuring participant health and welfare include (but are not necessarily limited to):
Specifying the qualifications of waiver providers and verifying that providers continuously meet
these qualifications;
Periodically monitoring the implementation of the service plan and participant health and
welfare;
Identifying and responding to alleged instances of abuse, neglect and exploitation that involve
waiver participants; and
Instituting appropriate safeguards concerning practices that may cause harm to the participant or
restrict participant rights.
The renewal of a waiver is contingent on CMS determining that the state has effectively assured
the health and welfare of waiver participants during the period that the waiver has been in effect.
In its application, the state must specify how it monitors performance in assuring health and
welfare and the other waiver assurances by preparing and submitting a quality improvement
strategy, discussed in more detail below.
Waiver Administration and Operation
A waiver may be operated directly by the Medicaid agency or by another state agency (termed
the “operating agency’) under a written agreement with the Medicaid agency, so long as the
Medicaid agency retains ultimate authority and responsibility for the waiver in accordance with
State Medicaid Agency administrative authority at 42 CFR § 431.10(b)(1). In addition, a state
may provide that local or regional non-state organizations (e.g., county human services agencies)
or contracted entities perform some waiver administrative and operational tasks, so long as the
authority of the Medicaid agency over the waiver is maintained, and any delegation of function
performance or authority is expressly identified in writing.
Participant Rights
Pursuant to 42 CFR § 431.220, a state must provide that individuals have the opportunity to
request a Medicaid Fair Hearing when they are not given the choice to receive waiver services,
are denied the waiver services or providers of their choice, or their waiver services are denied,
suspended, reduced or terminated-

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Instructions: Version 3.7 HCBS Waiver Application

Cost Neutrality
In its application and each year during the period that the waiver is in operation, the state must
demonstrate that the waiver is cost neutral, pursuant to 42 CFR § 441.303(f). In particular, the
average per participant expenditures for the waiver and non-waiver Medicaid services must be
no more costly than the average per person costs of furnishing institutional (and other Medicaid
state plan) services to persons who require the same level of care.
Quality Improvement Strategy: Overview
For the purpose of the application, the state is expected to have, at the minimum, systems
in place to measure and improve its performance in meeting the waiver assurances that are
set forth in 42 CFR §§ 441.301 and § 441.302. These assurances address important dimensions
of waiver quality, including assuring that service plans are designed to meet the needs of waiver
participants and that there are effective systems in place to monitor participant health and
welfare. CMS recognizes that the design of the QIS will vary depending on the nature of the
waiver target population, the services offered, and the waiver’s relationship to other public
programs.
While the QIS must address the waiver assurances as a prerequisite, it can extend to aspects of
waiver operations the state deems critical in achieving the waiver’s purpose and meeting the
expectations of waiver participants and stakeholders. For example, the QIS might include
identifying and tracking performance in achieving critical participant outcomes, assessing how
effectively the waiver supports participants to direct their services, or improving the capabilities
of waiver providers to effectively support participants. In other words, while the QIS as a
prerequisite must address compliance with the essential waiver assurances, the state need not
limit the scope.
Finally, CMS recognizes that quality improvement is dynamic, and the QIS may change over
time. CMS expects that states will have all essential quality improvement components in place
at the time the waiver application is submitted.
In March 2014, CMS issued guidance that clarifies sub assurances for each waiver assurance,
describes how states may combine quality systems across multiple waivers and discusses some
modifications in the IPG process. CMS also issued guidance in July 2022, announcing a
standard HCBS measure set that may be used to satisfy some of the assurances outlined in the
2014 guidance (available in Attachment D).
Waiver Assurances and Other Federal Requirements
The waiver assurances (and their component elements)must be included in the QIS pursuant to
42 CFR § 441.302. Also included in parentheses are references to the specific parts of the
application that pertain to the respective assurance.
•

Administrative Authority (Quality Improvement: Appendix A)
Assurance: The Medicaid agency retains ultimate administrative authority and
responsibility for the operation of the waiver program by exercising oversight of the
performance of waiver functions by other state and local/regional non-state agencies (if
appropriate) and contracted entities.

•

Level of Care (LOC) (Quality Improvement: Appendix B)
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Assurance: The state demonstrates that it implements the processes and instrument(s)
specified in its approved waiver for evaluating/re-evaluating and applicant’s/waiver
participant’s level of care consistent with care provided in a hospital, NF, or ICF/IID.
An evaluation for LOC is provided to all applicants for whom there is reasonable
indication that services may be needed in the future.
The levels of care of enrolled participants are reevaluated at least annually or as
specified in the approved waiver.
The processes and instruments described in the approved waiver are applied
appropriately and according to the approved description to determine participant LOC.
•

Qualified Providers (Quality Improvement: Appendix C)
Assurance: The state demonstrates that it has designed and implemented an adequate
system for assuring that all waiver services are provided by qualified providers.
The state verifies that providers initially and continually meet required licensure and/or
certification standards and adhere to other standards prior to their furnishing waiver
services.
The state monitors non-licensed/non-certified providers to assure adherence to waiver
requirements.
The state implements its policies and procedures for verifying that provider training is
conducted in accordance with state requirements and the approved waiver.

•

Service Plan (Quality Improvement: Appendix D)
Assurance: The state demonstrates it has designed and implemented an effective system
for reviewing the adequacy of service plans for the waiver participants.
Service plans address all participants’ assessed needs (including health and safety risk
factors) and personal goals, either by waiver services or through other means.
Service plans are updated/revised at least annually, when the individual’s circumstances
or needs change significantly, or at the request of the individual.
Services are delivered in accordance with the service plan, including the type, scope,
amount, duration, and frequency specified in the service plan.
Participants are afforded choice between/among waiver services and providers.
The state monitors service plan development in accordance with its policies and
procedures.

•

Health and Welfare (Quality Improvement: Appendix G)
Assurance: The state demonstrates it has designed and implemented an effective system
for assuring waiver participant health and welfare.
The state demonstrates on an ongoing basis that it identifies, addresses and seeks to
prevent instances of abuse, neglect, exploitation and unexplained death.
The state demonstrates that an incident management system is in place that effectively
resolves those incidents and prevents further similar incidents to the extent possible.

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Instructions: Version 3.7 HCBS Waiver Application

State policies and procedures for the use or prohibition of restrictive interventions
(including restraints and seclusion) are followed.
The state establishes overall health care standards and monitors those standards based on
the responsibility of the service provider as stated in the approved waiver.
•

Financial Accountability (Quality Improvement: Appendix I)
Assurance: The state must demonstrate that it has designed and implemented an adequate
system for insuring financial accountability of the waiver program.
The state provides evidence that claims are coded and paid for in accordance with the
reimbursement methodology specified in the approved waiver and only for services
rendered.
The state provides evidence that rates remain consistent with the approved rate
methodology throughout the five-year waiver cycle.

Continuous Quality Improvement
CMS expects states to follow a continuous quality improvement (CQI) process in the operation
of each waiver program. The process involves a continuous monitoring of the implementation of
each waiver sub-assurance, methods for remediation or addressing identified individual problems
and areas of noncompliance, and processes for a) aggregating collected information on discovery
and remediation activities, and b) prioritizing and addressing needed systems changes on a
regular basis.
Discovery
Discovery consists of monitoring and data collection activities that identify whether and to what
extent the State addresses compliance with the assurances. Relevant discovery sources may
include record/chart reviews, financial reviews, interviews with participants and providers,
observation of program operations; compilation of operations data such as incidents and
complaints, claims data, fair hearings and appeals data or the results of licensure/certifications
reviews. Discovery activities also might include conducting a structured review targeted to a
geographic area or type of service, special studies, or securing the services of an outside entity to
perform an oversight/evaluation function.
Discovery activities intended to evaluate how well the state has performed relative to a subassurance must be expressed as a performance measure (i.e., a measurable statement reflecting
all aspects of the sub-assurance, consisting of a specifically stated numerator and denominator).
The numerator must represent the number of items determined to be compliant with the
performance measure. The denominator must represent the number of items reviewed, which
will usually be the same as the sample size for the performance measure. The state’s numerator
and denominator must be consistent with the state’s sampling methodology. Sampling of less
than 100 percent of the universe must be statistically valid. CMS strongly suggests a confidence
interval with at least a 95 percent confidence level and +/- 5 percent margin of error. Lower
sampling standards will require an explanation by the state. Such an approach provides a clear
and concise evidence-based representation of a state’s compliance with an assurance. As such, a
state is expected to provide information on the method by which each source of data is analyzed

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Instructions: Version 3.7 HCBS Waiver Application

statistically/deductively or inductively, how themes are identified or conclusions drawn, and
recommendations are formulated.
By way of illustration, the “qualified providers” assurance requires the state to verify on a
periodic basis that providers meet approved licensure and/or certification standards and/or adhere
to other state standards. In Appendix C-1/C-3, states are expected to include information about
each waiver service’s provider qualifications, the entity (or entities) responsible for verifying
provider qualifications, and how frequently the verification of provider qualifications is
performed. One of the state’s monitoring activities should describe the source of collected
information (for example, record reviews of all waiver program providers or a statistically
significant representative sample) and the performance measurement of providers meeting the
required qualifications, (that is, from a statistically significant sample, the number meeting
approved qualifications (numerator) over the total number reviewed (denominator).
Remediation
It is important to keep in mind that, in each instance, the QIS should specify a similar numerical
approach for identified problems or areas of noncompliance, and corrective or remedial actions
taken when problems are discovered. The approach is critical in that states must show
compliance with the CMS statutory assurances. Therefore, while monitoring data/indicators
reveal a level of system performance for discovery activities, when the system performance is
less than 100%, a remediation plan is necessary to correct identified areas of noncompliance.
Those individually identified areas require correction in order to support compliance with the
assurance, and quality improvement. Specific activities include:
•

The remedial action to be taken;

•

The timeline for when remediation is effectuated;

•

Those responsible for addressing remedial activities; and,

•

The frequency with which performance/compliance is measured.

While it is up to the state to identify the types of information used to measure performance
related to the assurances, it should be sufficient to conclude compliance with the assurance has
been met. Often more than one data source can be tapped to evaluate performance, particularly
related to the health and welfare assurance.
Measuring performance against the assurances may occur at different intervals, at different
frequency rates, and with varying intensity. The state, however, should be able to verify to its
stakeholders and CMS that it has measured its performance against the assurances no less than
annually. The approach or frequency of measurement may vary from year to year, particularly
when the state finds that it routinely meets the requirements and assurances.
Sampling Approach
The CMS quality requirements are founded on an evidence-based approach. CMS requests from
the state evidence that it meets the assurances, and that it applies a continuous quality
improvement approach to the assurances. CMS therefore relies on the evidence or data produced
by the State to substantiate compliance. For that reason, it is critical that states can assert with a
degree of confidence that evidence produced is valid and reliable. Without such certainty, it is
difficult at best for the federal government, waiver recipients, or stakeholder groups to have
confidence in the state’s reported performance. CMS strongly urges state to have a solid
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sampling approach to the evidence it collects. A reference guide on sampling is available in
Attachment D of the waiver application resource manual.
Roles and Responsibilities
States are expected to describe the roles and responsibilities of the parties involved in the quality
improvement strategy as they relate to discovery, remediation, and improvement activities. The
description should include the roles and responsibilities of the Medicaid agency, operating
agency and non-state entities (as applicable), other state agencies, participants, families and
advocates, providers, and other contractors (if appropriate) in operationalizing the processes in
the quality improvement strategy such as collecting and analyzing individual and system-level
information, determining whether the waiver requirements and assurances are met, implementing
remediation, and planning system improvement activities.
The focus of this QIS element is on identifying who is involved in appraising performance in
meeting the waiver assurances based on the results of discovery processes. The parties involved
in performance appraisal may vary by assurance, depending on the nature of the assurance. The
state may organize the involvement of individuals and entities in any number of ways including,
but not limited to, establishing a quality improvement unit, forming quality improvement
councils, and establishing standing committees. It is not necessary that the Medicaid agency
directly conduct every aspect of the quality improvement strategy. However, since the QIS
focuses on meeting the waiver assurances, it is necessary that the Medicaid agency be the source
of the delegation of activities in the QIS, and the recipient of the monitoring, remediation and
system improvement reports that pertain to meeting the assurances. The Medicaid agency must
also perform its own monitoring of all delegated activities in accordance with Medicaid
administrative authority at 42 CFR § 431.10(b)(1).
CMS urges states to widen the circle of parties involved in waiver performance appraisal to
include waiver participants, families (when appropriate), providers and other parties who are
directly affected by waiver operations.
Example: Assuring health and welfare requires multiple discovery strategies that generate
information about abuse, neglect, exploitation, accidents and injuries, hospitalizations,
medication errors, the use of restraints, and self-reports about safety. The QIS might designate
one entity or groups of individuals (participants, providers, advocates) to evaluate the utilization
of restraints, determine whether improvement strategies are necessary and develop those
strategies and specify another entity or groups of individuals to evaluate hospitalizations,
accidents and injuries to determine whether there are areas, providers or participants who may
warrant special attention.
Example: Monitoring participant service planning and service delivery generates information
about implementation of the service plan that might be used by the operating agency alone to
evaluate performance, or the operating agency might engage case managers to evaluate
information from discovery and to develop improvement strategies. The Medicaid agency may
use the same information reports to determine whether the operating agency’s oversight system
is effective.
The state may create regional or statewide quality councils made up of participants, advocates,
providers, clinicians, quality improvement specialists, and government managers to receive
recommendations from various committees and determine what strategies should be adopted.

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However, the creation of quality councils is not required. It is one mechanism that a state may
use to appraise performance and secure input regarding quality improvement strategies.
Comprehensive Quality Improvement Strategy –Displaying and Printing in the Web-Based
Application
While states are expected to describe components of the quality improvement strategy for the
waiver in multiple appendices of the application, there is capability within the web-based
application to display and print the quality improvement strategy in its entirety. From the Print
Options Menu in the web-based application, simply click on the button entitled “Print/Display
Quality Improvement Strategy.” This function will extract the information from all relevant areas
in the application to assemble the comprehensive quality improvement strategy for the waiver in
one consolidated document that can be either saved or printed.
Federal Administration of the HCBS Waiver Authority
The HCBS waiver authority is administered by the Center for Medicaid and CHIP Services
(CMCS) at the Centers for Medicare & Medicaid Services (CMS), U.S. Department of Health
and Human Services (HHS). Within CMCS, the Medicaid Benefits and Health Programs Group
(MBHPG) Division of Long-Term Services and Supports (DLTSS) has lead responsibility for
developing policies concerning the HCBS waiver authority and technical assistance to states in
the design and operation of waivers.
The Medicaid and CHIP Operations Group (MCOG) Division of HCBS Operations and
Oversight (DHCBSO) is the first point-of-contact for the states concerning the HCBS waiver
program. DHCBSO is also tasked with oversight of the waivers and engaging in ongoing
dialogue with the state concerning waiver operations and performance. DLTSS and DHCBSO
share responsibilities for reviewing waiver applications and requests for amendments and
providing technical assistance to states concerning the design and operation of waivers.
HCBS Waiver Services, the ADA and Olmstead
CMS recognizes the important role that Medicaid plays in states’ efforts to ensure compliance
with the ADA and Olmstead. In the early 2000s, CMS (then the Health Care Financing
Administration) issued a series of letters to State Medicaid Directors to identify policies, tools,
and expectations for home and community-based services (HCBS) and their role in Olmstead
compliance. These letters, collectively known as “the Olmstead letters,” identified services that
help transition individuals from institutional to community settings and maintain their
community living status. The letters also described the obligations of states under federal
Medicaid rules to provide services necessary to assure the health and welfare of individuals
served under Medicaid section 1915(c) waiver programs. Although this guidance is intended
with respect to the Medicaid program, we note that states have obligations pursuant to the
Americans with Disabilities Act, section 504 of the Rehabilitation Act, and the Supreme Court’s
Olmstead decision. Approval of any Medicaid waiver action does not address the state’s
independent obligations under the Americans with Disabilities Act or the Supreme Court’s
Olmstead decision.
HCBS Waiver Resources on the Web
In addition to the web-based application for section1915(c) waivers located at https://wmsmmdl.cms.gov/WMS/faces/portal.jsp, CMS makes available assorted information and resources
via its website (www.medicaid.gov). General information about the HCBS waiver program along
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Instructions: Version 3.7 HCBS Waiver Application

with links to other pertinent information is located at
https://www.medicaid.gov/medicaid/hcbs/guidance/index.html.
Version 3.7 HCBS Waiver Application Organization
The Version 3.7 HCBS Waiver Application consists of an application “module” and ten
appendices, each of which addresses specific dimensions of waiver operations.
•

Application (Module1). The initial section of the application contains the formal state
request to operate a section 1915(c) HCBS waiver, including the request for waiver(s) of
specific sections of the Act. This module also includes a brief description of the waiver’s
goals, objectives, organization, and service delivery methods. It also contains the
fundamental assurances and additional federal requirements that apply to the operation of
a waiver.

•

Appendix A: Waiver Administration and Operations. This Appendix identifies the
state agency that is responsible for the day-to-day operation of the waiver along with
other entities that are involved in its operation, including as applicable contracted entities
and local/regional non-state entities. The distribution of certain waiver operational
responsibilities among these entities also is specified. This Appendix addresses the
question: “What entities are involved in the operation of the waiver?”

•

Appendix B: Participant Access and Eligibility. This Appendix is designed to answer
the question: “Who receives waiver services?” In this Appendix, a state specifies: (a) the
waiver’s target group(s); (b) the individual cost limit (if any) that applies to individuals
entering the waiver; (c) the number of individuals who will be served in the waiver and
how this number will be managed during the period that the waiver is in effect; (d) the
Medicaid eligibility groups served in the waiver; (e) applicable post-eligibility treatment
of income policies; (f) procedures for the evaluation of level of care of prospective
entrants to the waiver and the periodic re-evaluation of the level of care of waiver
participants; (g) how individuals are afforded freedom of choice in selecting between
institutional and home and community-based services; and, (h) how the state provides for
meaningful access to the waiver by individuals with Limited English Proficiency (LEP).

•

Appendix C: Participant Services. This Appendix is designed to answer the question:
“What services does the waiver offer?” In this Appendix, the state establishes the
specifications for each waiver service and any limitations that apply to a service or the
overall amount of waiver services. A service specification template (Appendix C-3)
consolidates information about each waiver service (including its scope, provider
qualifications, and whether the service may be participant-directed).
Pre-specified service definitions are not embedded in the Version 3.7 waiver application.
[N.B., “Core service definitions” that a state may adapt are included as an attachment to
the Appendix C instructions.] This Appendix also captures information about state
policies concerning criminal history/background and abuse registry checks, payments to
legally responsible individuals for the provision of personal care and to relatives/legal
guardians for the provision of services, and the 1915(c) home and community-based
setting requirements.

•

Appendix D: Participant-Centered Planning and Service Delivery. In this Appendix,
the State describes how the person-centered service plan (plan of care) is developed along
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with how the state monitors (a) the implementation of the service plan and (b) participant
health and welfare. This Appendix is designed to answer two questions: “How are
participant needs identified and addressed during the person-centered service plan
development process?” and “How does the state monitor the delivery of waiver
services?”
•

Appendix E: Participant Direction of Services. This Appendix is designed to answer
the questions: “What authority do participants have to direct some or all of their waiver
services?” and “How are participants supported in directing their services?” This
Appendix permits a state to specify the opportunities afforded to waiver participants to
direct and manage their waiver services. This Appendix is completed only when the
waiver offers one or both of the participant direction opportunities contained in the
Appendix. The new application enables a state to offer participant direction in a waiver
in which other service delivery methods also are used or, alternatively, provide that
participant direction is the principal service delivery method that is used in the waiver.

•

Appendix F: Participant Rights. In this Appendix, a state describes how it affords
waiver participants the opportunity to request a Fair Hearing as well as any alternate
processes that are available to resolve disputes or address participant complaints/
grievances. This Appendix addresses the question: “How are participant rights
protected?”

•

Appendix G: Participant Safeguards. This Appendix addresses the question: “What
safeguards has the state established to protect participants from harm?” In this
Appendix, a state describes how it provides for specific safeguards related to assuring
participant health and welfare (e.g., response to critical incidents).

•

Appendix H: Systems Improvement. Here, a state describes the mechanisms it will use
to engage in systems improvement activities based upon the information it gathers from
the discovery and remediation strategies described throughout the application.

•

Appendix I: Financial Accountability. In this Appendix, a state specifies how it makes
payments for waiver services, ensures the integrity of these payments and complies with
applicable requirements concerning payments and federal financial participation. The
Appendix is designed to answer the question: “How does the state maintain financial
accountability in the waiver?”

•

Appendix J: Cost Neutrality Demonstration. In this Appendix, the State furnishes
necessary information to demonstrate the cost neutrality of the waiver. This Appendix is
designed to answer the question: “Does the waiver meet statutory cost-neutrality
requirements?”

•

Appendix K (not in the waiver management system): Emergency Preparedness and
Response. Separate from the waiver management system (WMS), states can request to
add an Appendix K to an approved 1915(c) HCBS waiver application for temporary use
by the state during emergency situations. It includes flexibilities that states can request
via a temporary waiver amendment in order to respond to an emergency. CMS created
this appendix to reduce the administrative burden during times of emergencies. The state
may only make changes that are permitted under 1915(c) authority. The state may not
make changes that are not allowed under statute, such as the inclusion of room and board
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costs. Changes that a state may want to make that necessitate authority outside the scope
of the 1915(c) authority may be possible with the use of other Medicaid authorities such
as section 1115 demonstration waivers or the section 1135 waiver. The state may request
a retroactive effective date for an Appendix K amendment. States are not required to
apply the 1915(c) public input requirements in an Appendix K amendment; however, the
Medicaid Tribal Notice/Consultation requirements do apply. The Appendix K
amendment template and technical guidance can be found at:
https://www.medicaid.gov/resources-for-states/disaster-response-toolkit/homecommunity-based-services-public-health-emergencies/emergency-preparedness-andresponse-for-home-and-community-based-hcbs-1915c-waivers/index.html
Ongoing CMS Waiver Application Activities
CMS is engaged in several ongoing activities related to the waiver application/review processes
and continuing improvement of federal oversight and monitoring of HCBS waivers.
Implementation of the Web-Based Application
With the Version 3.4 application, CMS implemented a web based HCBS waiver application
format. Ongoing improvements to the web-based format have further streamlined the
application process by eliminating paper copies, enabling states to enter, save, and submit the
HCBS waiver application via the Internet, and supports internal CMS processing and review of
applications, renewal requests and amendments. The web-based tool stores all waivers and
amendments chronologically so that CMS and the state may at any time view the currently
approved waiver, or previously approved versions.
Additional Activities
CMS undertakes the following additional activities:
•

Ongoing Dialogue with State Associations. CMS is continuing its dialogue with the state
associations concerning the HCBS waiver program. This dialogue has proven to be
invaluable in continually improving the operation of the program.

•

Continuous Solicitation of State User Feedback. CMS continuously invites feedback
from states that employ the Version 3.7 HCBS Waiver Application about ease of use and the
need for additional clarification.

•

Periodic Revisions to the Application and Instructions. Periodically, CMS will revise
and update both the waiver application and these instructions. These revisions will
incorporate interim technical clarifications that are issued between revisions. Revisions
also may be necessary to reflect new policy developments.

Waiver Application Submission Requirements, Processes and Procedures
Overview
This section addresses the following topics:
•
•
•
•

Use of the Version 3.7 HCBS Waiver Application;
Policies concerning the submission of new and renewal waiver applications;
Policies concerning the submission and CMS review of waiver amendments; and,
Related topics
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Instructions: Version 3.7 HCBS Waiver Application

Submission of Applications
A state must submit a new or renewal waiver application using the Version 3.7 application by
employing the web-based application.
Making a Submission Using the Web-Based Application
There are several benefits in employing the web-based application to prepare and submit new
and renewal applications. These benefits include:
•

The web-based application automatically links interrelated parts of the application.
Where appropriate, information that is entered in one part of the application is
automatically entered in other parts of the application that use the same information. For
example, the information about waiver services that is entered in Appendix C is used to
populate the Factor D tables in Appendix J. This feature ensures internal consistency
within the application. In addition, the web-based application turns off parts of the
application that do not apply to a request.

•

The web-based application employs validation checks to ensure that selections made in
one part of the application are consistent with selections made in other parts. For
example, the selection of Medicaid eligibility groups in Appendix B-4 is tightly linked to
the selections concerning post-eligibility treatment of income in Appendix B-5. These
validation checks ensure that the application has been completed appropriately and
expedite CMS review. In addition, the web-based application prevents the submission of
incomplete applications.

•

The web-based application also supports internal CMS processing of applications. CMS
is notified electronically when an application is submitted and there is tracking of where
the application stands in the review/approval process.

•

Once an application that has been submitted via the web is approved, states can submit
amendments by making changes to the application on the web. Both CMS and states
have continuous access to the most up-to-date version of the approved waiver.

Use of the web-based application facilitates both state preparation and CMS review of
applications. Separate technical instructions have been issued for using the web-based
application.
A new waiver, renewal or amendment is considered submitted when the State Medicaid Director
(or designee) submits the application using the submission feature, which is reserved for use only
by the Medicaid Director. Submission of the application by the State Medicaid Director is
equivalent to signature of the application by the State Medicaid Director. When the application
is submitted via the web, the date on which the State Medicaid Director submits the application
is considered to be the official submission date for the purpose of starting the 90-day “clock” for
CMS review and disposition of the request (see below for further discussion of the 90-day
clock). The application is not submitted separately in printed hard copy form when the webbased application is used.
Making Changes to a Submitted Application
Once a waiver application or amendment has been submitted, it may be necessary to make
changes. For example, CMS review of a waiver application or amendment may result in CMS
suggesting that the state modify the application or amendment. If the state concurs, the state
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Instructions: Version 3.7 HCBS Waiver Application

needs to make the change to the application or amendment and resubmit the affected portions of
the application to CMS. Under no circumstances can CMS personnel modify a waiver
application or amendment request.
Once an application is submitted via the web, the application is “locked” and cannot be modified
unless unlocked by CMS. Locking the application preserves the integrity of the original
submission. If it is necessary to modify the application, CMS will unlock the application so that
the state may make changes. Once the state has made the changes and resubmitted the
application to CMS, the application will be locked again.
CMS Waiver Review Process
In general, waiver applications, renewals, and specific amendments are reviewed jointly by
CMCS/MBHPG/DLTSS and CMCS/MCOG/DHCBSO . CMS strives to ensure that relevant
federal policies are applied consistently across all types of waiver requests. CMS also seeks to
work collaboratively with states to resolve issues. In addition, CMS developed the “Instrument
for Reviewing State 1915 (c) HCBS Waiver Applications” to assist CMS waiver analysts in their
review of waiver applications and to build consistency into the application review process.
Requesting Division Review
From time to time, issues may arise where the state believes that the resolution of an issue
proposed by the CMCS review team is problematic. When this situation arises, the state may
request that the issue be referred to the DLTSS Director at CMCS/MBHPG for further review.
The state should delineate why it regards the proposed resolution to be problematic and the
state’s preferred resolution of the issue. The DLTSS Director will examine the issue and, as
necessary, consult with the state and the CMCS review team to resolve the issue. The Director
will transmit the proposed disposition of the issue to the state and the CMCS review team.
Policies Concerning New and Renewal Waiver Applications
This section provides information about the policies that apply to the submission of and CMS
action on new and renewal waiver applications.
90-Day Clock
In accordance with 42 CFR § 430.25(f)(3), CMS has no more than 90 calendar days within
which to approve or deny an initial waiver application, a waiver renewal or an amendment
request or alternatively issue a written request for additional information (RAI). The 90-day
period within which CMS must act on a waiver request is known as the “90-day clock.” The 90day clock starts on the day that CMS receives the request. It is extremely important to keep the
90-day clock in mind when preparing new or renewal waiver applications or amendment
requests. In particular:
•

In the case of an initial or new waiver application, CMS recommends that the
application be submitted at least 90 calendar days in advance of the proposed
waiver effective date. If a request to launch a new waiver is received fewer than 90days in advance of the proposed effective date, CMS may not be able to complete its
review in time to permit the waiver to be implemented when desired by the state. States
should consider submitting new waiver applications six-months in advance of the
proposed effective date. Submitting a new application well in advance of the proposed
effective date increases the likelihood that the waiver can be approved on or before the
desired effective date and takes into account the possibility of an RAI. It is important to
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Instructions: Version 3.7 HCBS Waiver Application

keep in mind that a new waiver may only be approved with a prospective effective date,
in accordance with 42 CFR § 441.304(a). New waivers may not take effect retroactively.
•

In the case of a waiver renewal application, in accordance with 42 CFR §
430.25(h)(3), the application also must be submitted at least 90 calendar days in
advance of the approved waiver’s expiration date. If a waiver renewal request is
received fewer than 90-days in advance of the expiration date, CMS may not be able to
complete its review by the waiver’s expiration date. As with new waiver requests, the
state should consider submitting a renewal application six months in advance of the
waiver’s expiration date so that there is time to resolve any questions that might arise
during the CMS review of the renewal request.

As a general matter, CMS attempts to resolve problems with a waiver application through
informal dialogue with the state. Informal requests for additional information (which might be
made by telephone or e-mail) do not stop the 90-day clock. CMS attempts to identify any
serious problems in an application within 45-days of its receipt.
If significant problems are identified in the waiver application, the state may take the application
“off-the-clock” by notifying CMS that its submission is incomplete. Once the state has
addressed the problems, it may resubmit the application, whereupon a new 90-day clock will
start. The state also has the option to formally withdraw a request. This option should be
considered when the state determines that it is no longer interested in pursuing the request as
submitted.
In the case of either a new waiver application or a renewal request, CMS may issue a formal,
written “RAI in the event that CMS identifies issues or problems in the application that are
sufficiently serious that CMS may have to disapprove the application unless the problems are
resolved satisfactorily.
Only a single RAI will be issued during the waiver review period. When a RAI is issued, the 90day clock is stopped. The clock remains stopped until the state submits its response to the RAI.
Once the response is received, a new 90-day clock starts. In the case of a new waiver
application, the issuance of a RAI may make it difficult to complete the review of the application
by the state’s desired effective date, depending on how far in advance of the proposed effective
date the application was submitted and how quickly and satisfactorily the state responds to the
RAI. In the case of a renewal application, the issuance of a RAI may pose significant difficulties
for completing the review of the renewal application in advance of the expiration date, especially
if the application was submitted only 90-days in advance of the expiration date.
The state may wish to stop the clock by notifying CMS that its submission is incomplete if CMS
determines that the state’s response to a RAI does not satisfactorily resolve the problems in the
application. Stopping the clock on an application avoids CMS having to disapprove the
application. CMS does not have the authority to suspend its consideration of a waiver request
absent a state request to stop the clock.
CMS makes every effort to complete its review of a waiver application on a timely basis and
avoid stopping the clock so that new waivers can be implemented when planned by the state and
renewals are approved in advance of the waiver’s expiration date. Meeting this objective is
aided when the state responds promptly to CMS requests to clarify the application. When CMS
approves a new waiver, waiver renewal or amendment, it will formally notify the state in writing.
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Instructions: Version 3.7 HCBS Waiver Application

New Waiver Applications
When a state wants to launch a new waiver, it submits an initial waiver application. Under the
Act, CMS may approve a new waiver program for a period of three-years or, if the waiver serves
individuals who are dually eligible for Medicare and Medicaid, five years at the state’s option.
The new waiver year period starts on the effective date of the waiver. A new waiver may not go
into effect until the effective date proposed by the state or the date that CMS approves the
waiver, whichever is later. Again, the state must propose a prospective effective date. A new
waiver is never approved retroactively. To account for both the 90 day review period specified
in 42 CFR § 430.25(f)(3) and the requirement that new waivers must be prospective in
accordance with 42 CFR § 441.304(a), an application for a new waiver must provide for an
effective date at least 90-days after the date of submission. If CMS does not approve the waiver
request until after the effective date proposed by the state, CMS will ask the state whether it
wishes the effective date to be the date that CMS approved the waiver or another date (e.g., the
first of the following month to facilitate waiver reporting).
When a new waiver is approved but the state experiences a delay in implementing the waiver on
the approved effective date, the state may submit an amendment to move forward the initial
effective date (as long as no waiver services have been provided or claimed), in order to start the
three or five-year waiver period on the date that the state actually implements the waiver.
Special Considerations: Section 1915(c) Waivers that Operate with Concurrent Managed
Care
A state may apply for a section 1915(c) waiver to operate with a concurrent Medicaid managed
care authority. Concurrent waivers can be used by a state to combine the delivery of HCBS
waiver services with the provision of other state plan services through a managed-care service
delivery system. The managed care authority permits a state to waive provisions of the Act
beyond the waivers that may be requested under the section 1915(c) waiver authority. For
example, a state may request a waiver of section 1902(a)(23) of the Act, the free choice of
providers requirement, under authority of section 1915(b)(4) in order to selectively contract with
entities that furnish waiver and specified state plan services through a managed care
arrangement.
In order to operate managed care/section 1915(c) concurrent waivers, a state must complete and
submit separate managed care and section 1915(c) waiver applications (or amendments). Each
application has different requirements because each waiver authority is governed by distinct
provisions of the Act and is subject to different federal regulations. Where appropriate, the
Version 3.7 HCBS Waiver Application takes into account the limited number of areas where
requirements and features of Medicaid managed care authorities and section 1915(c) waivers
intersect.
When a state applies to operate managed care/section 1915(c) concurrent waivers, CMS reviews
each application or amendment to ensure that it meets the relevant statutory and regulatory
requirements that attach to the waiver authority under which they will operate. Both applications
are subject to a 90-day clock. CMS internally coordinates the review of both applications.
Since the approval of managed care/section 1915(c) concurrent waivers hinge on the approval of
both applications, CMS may not approve the section 1915(c) application until the managed care
authority has been determined to be approvable and/or vice versa. Because significant problems
might surface in the review of either application, it is recommended that a state submit a request
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Instructions: Version 3.7 HCBS Waiver Application

to operate managed care/section 1915(c) concurrent waivers at least six months in advance of the
proposed waiver effective date. The two applications may need to be submitted simultaneously
so that they can move forward under the same 90-day clock and be effective on the same date.
Special Considerations: Section 1915(a) Authority Concurrently with a 1915(c) Waiver
A state may operate a section 1915(c) waiver in conjunction with section 1915(a) authority,
which permits a state to waive statewideness, comparability, or free choice of provider under
certain circumstances. Typically, states have used section 1915(a) authority to provide for
voluntary managed care for all or some HCBS waiver participants. As the effect on an HCBS
waiver varies with the authority sought under section 1915(a), and since combination section
1915(a)/(c) waivers are not common, these instructions do not discuss options available under
section 1915(a) throughout. See the Appendix I instructions for a discussion of the section
1915(a) authority regarding managed care contracts. Contact CMS to discuss an HCBS
application that will include section 1915(a) authority.
New Waiver to Replace an Approved Waiver
There are circumstances when a new waiver application is submitted to replace an approved
waiver:
•

State Election. A state may decide to submit a new waiver rather than renew an
approved waiver because the state wants to redesign the waiver. The submission of a
replacement waiver may be advantageous when the revisions that the state wants to make
are substantial and affect many elements of the waiver. When a state decides to replace
an existing waiver, the proposed effective date of the new waiver must coincide with the
expiration or termination date of the approved waiver (e.g., if the approved waiver
expires on June 30, the new waiver should be made effective on July 1 to ensure
continuity of participant services). The submission of a new application to replace an
existing waiver does not affect the expiration date of the approved waiver. Also, in this
circumstance, a state is expected to include in the waiver a transition plan to describe
how the transition between the existing and the new waiver will be accomplished (see the
detailed instructions for the Application (Module 1) for a discussion of what to include in
the transition plan).

•

CMS Directs the Submission of a New Application. When CMS determines that there
are serious problems in the operation of an approved waiver, CMS may direct the state
to replace the approved waiver with a new waiver. This circumstance may arise when the
CMS review of waiver operations reveals substantial problems in assuring waiver
participant health and welfare or when other serious operational deficiencies are
identified. In the application for the replacement waiver, the state is expected to propose
a waiver redesign that effectively addresses the shortcomings that CMS has identified. In
addition, the state may be expected to periodically report its progress in implementing
corrective actions to correct waiver operational deficiencies.

Except in the foregoing circumstances, CMS will not generally require that a state submit a new
waiver to replace an approved waiver even when significant changes are proposed to the
approved waiver either via waiver amendment or in a renewal application. However, if major
changes are proposed that might adversely affect current participants (e.g., by altering a waiver’s
target population or eliminating services that are provided in the approved waiver), CMS may
request the state to provide additional justification and/or submit a transition plan that describes
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Instructions: Version 3.7 HCBS Waiver Application

the steps that the state will take to address the impact of the changes on current waiver
participants. Again, see the instructions for the Application (Module 1) for a more detailed
discussion of transition plans.
Renewal Applications
Waivers that have not been formally renewed by the end of the waiver period
automatically expire. Section 1915(c) of the Act does not provide for the automatic extension
of an approved waiver. In order to ensure the continuous operation of a waiver, a waiver
renewal application should be submitted to CMS at least 90 but preferably 180 calendar days
prior to the end of the waiver period.
There are two conditions that must be met in order for CMS to consider a waiver renewal
application, in accordance with 42 CFR § 441.304(a). These are:
•

The state has submitted, and CMS has accepted the required HCBS annual waiver
financial and statistical reports (the CMS-372(S) through the end of the next-to-last
waiver year. The annual waiver report(s) demonstrates that the waiver has been costneutral and also provides information on the quality of services. Cost neutrality and
assuring health and welfare are fundamental statutory and regulatory requirements.
Failure to prepare and submit acceptable and timely annual waiver reports can jeopardize
continuation of the waiver and/or delay the renewal of the waiver.

•

CMS must determine that the waiver has been operated in accordance with the approved
waiver, all applicable federal requirements, and the waiver assurances. About one year
prior to the waiver expiration date, CMS will issue a report to the state summarizing its
findings and conclusions concerning the operation of the waiver. The report may include
recommendations concerning the operation of the waiver. If CMS identifies serious
problems in the operation of the approved waiver, the state needs to propose remedial
steps that are satisfactory to CMS to correct the problems. CMS must be confident that
the measures that the state has undertaken or plans to implement will effectively address
the problems before CMS can approve the waiver renewal request. It is important to note
that CMS is revamping its waiver oversight methods to provide for annual reporting by
states concerning performance in meeting the waiver assurances and expects that there
will be increased dialogue between the state and CMS throughout the waiver period
about performance. The CMS report on state waiver operations in advance of renewal
will rely principally on evidence submitted by the state, the annual waiver report that the
state submits each year to CMS, and the information obtained through the on-going
dialogue between CMS and the state.

If within 90 days of receipt of the renewal request, CMS is unable to conclude that the waiver
application satisfactorily addresses each assurance, including problems that may have surfaced
during the CMS review of the approved waiver and/or that the waiver is not cost neutral, CMS
may either formally request additional information or disapprove the renewal request.
Other Changes to Approved Waivers
There are other types of changes to approved waivers that merit additional discussion. In
particular:
•

Splitting a Waiver. A state may decide that it would be appropriate to divide an
approved waiver into two waivers. For example, when a single waiver serves both older
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Instructions: Version 3.7 HCBS Waiver Application

persons and individuals with disabilities under the age of 65, the state may determine that
dividing the waiver into two waivers may better meet the needs of each target group.
When the state proposes to make this change at the time of waiver renewal, the waiver
requests will be treated as renewals rather than as new waiver applications. That is, each
waiver can be made effective for another five-year period. When the split is accompanied
by significant changes in the services that will be provided to one or both of the target
groups or other changes that might substantially affect waiver operations, the state is
expected to include a transition plan in the waiver.
When the state wants to create two distinct waiver programs to serve the approved
waiver’s target population (for example, by dividing a waiver for persons with
developmental disabilities into separate waivers based on participant living arrangement),
the state should revise the approved waiver to encompass one of the desired
configurations and submit a new waiver application to implement the other configuration.
Splitting an approved waiver prior to its expiration date cannot be accomplished by the
submission of a waiver amendment. Instead, a state should discuss with CMS the
intended target populations to determine whether two new waivers will be required, or
whether an amendment to the existing waiver and one new waiver will be sufficient.
•

Combining Waivers. Alternatively, a state may determine that it would be more
efficient to combine two approved waivers that serve the same or very similar target
populations. If both waivers expire on the same date, the combination of the two
programs may be accomplished by submitting a renewal application for the waiver that
would continue and allowing the other program to expire. The state should alert CMS
when it plans to follow this course. In addition, when the two waivers cover different
services, CMS may require the state to prepare and submit a transition plan if the effect
of combining the waivers would be to reduce the services provided in one or both
waivers. If the waivers have different expiration dates, the state should notify CMS that it
intends to combine the two programs and seek instructions.

•

Converting a Model Waiver to a Regular Waiver. A waiver that has been approved as
a “model waiver” may be converted to a regular waiver when the state decides to serve
more than 200 individuals at any point in time. The conversion of a model waiver to a
regular waiver is not considered a request for a new waiver. The conversion may be
accomplished at the time of waiver renewal or by the submission of a waiver amendment.

•

Participant Limit Reductions. When the state submits a request to replace an existing
waiver, renew an approved waiver, or amend an approved waiver that would reduce the
number of unduplicated individuals who may be served in the waiver, the state is
expected to inform CMS whether the reduced participant cap would have an adverse
impact on current waiver participants, as provided in CMS State Medicaid Director letter
#01-006 Olmstead Update #4 (included in Attachment C). When a request reduces the
participant limit, the state may:
o Provide an assurance that, if the waiver request is approved, there will be sufficient
service capacity to serve at least the number of current participants enrolled in the
waiver as of the effective date of the new waiver, renewal or amendment. That is, the
lower participant limit has the effect of eliminating unassigned “slots.”

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Instructions: Version 3.7 HCBS Waiver Application

o Assure CMS that no current waiver participants will be removed from the program or
institutionalized inappropriately due to the lower participant limit. For example, the
State may achieve a reduction through attrition rather than terminating current waiver
participants.
o Provide an assurance and methodology demonstrating how individuals currently
served by the waiver will not be adversely affected by the lower participant limit. For
example, if the waiver is no longer required because the principal service(s) provided
through the waiver have been added to the state plan, the state may specify a method
to transition waiver participants to the state plan service. Individuals subject to
removal from a waiver are entitled to the opportunity to request a fair hearing under
Medicaid law.
o Provide a plan whereby affected individuals will transition to other HCBS waivers
without loss of Medicaid eligibility or loss of services. Any loss of services would be
subject to notice of Medicaid fair hearing rights.
o Provide for other means to assure the health and welfare of affected individuals,
including arranging for services that may be available under the state plan or through
other programs.
Extensions
As described in 42 CFR § 441.304(a)(2)(c),CMS will consider requests for temporary 90-day
waiver extensions only in very limited circumstances. A temporary extension permits the state
to continue to operate an approved waiver beyond its original expiration date. Extensions are not
granted solely for administrative convenience (e.g., to give the state extra time to prepare a
waiver renewal request). Extensions may be granted for various reasons:
•
•
•
•
•

The state wants to align the period of the waiver to a state fiscal year.
The state intends to combine the waiver with another waiver that is under review but has
not been approved by CMS.
The state plans to terminate a waiver and requires additional time to phase out the waiver
in an orderly fashion.
CMS has identified through its review of the waiver renewal application that there are
substantial problems in the waiver’s design that cannot be rectified by the state prior to
the expiration of the waiver; or
The state requires additional time to satisfactorily resolve quality or financial issues
identified by CMS during RO waiver review.

CMS expects states to formally submit a request for an extension in writing to CMS in
advance of the approved waiver’s expiration date. Extension requests are reviewed by CMS,
which makes the determination whether to approve the request. Extensions are considered on a
case-by-case basis. When a request for extension arises out of the need to address significant
waiver design problems identified by CMS during its review of the waiver renewal application or
rectify quality or financial issues, CMS will not approve the temporary extension request unless
and until the state submits a satisfactory action plan with specific milestones to resolve the
problems. CMS also will request the state to report its progress in implementing the action plan
during the extension period. Temporary extensions are only granted for a period of up to 90days.

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Instructions: Version 3.7 HCBS Waiver Application

All or part of the temporary extension approved by CMS may be subsumed into the period of the
waiver renewal. For example, if the waiver was due to expire June 30 but a 90-day temporary
extension was approved through September 30, the state may request that the renewal be
effective on July 1 or October 1. Please note that in general, a state may not amend a waiver
that is on a temporary extension. Instead, the state is required to operate the waiver consistent
with the most current CMS-approved waiver. Therefore, while a waiver is on temporary
extension, states may not implement any changes made to the waiver through the renewal
retroactively. Further, states may not implement any changes to the waiver made through the
renewal until the date that CMS approves the renewal.
Policies Concerning Waiver Amendments
Amendments to an approved waiver may be submitted at any time. As is the case with new or
renewal waiver applications, CMS has 90 calendar days within which to approve or disapprove
the amendment or formally request additional information in order to address problems that have
been identified in the amendment request. When a RAI is issued concerning an amendment, the
clock is stopped and only restarted (with a full 90-day clock) once the state responds to the RAI.
Whenever there is a change that affects an element of the approved waiver, the state should
submit an amendment to the waiver. The approved waiver should be kept in synchronization
with state waiver policies, practices, procedures and operations. For example, if a state wants to
alter a limit that it has imposed on the amount, frequency or duration of a waiver service, an
amendment should be submitted.
Therefore, all changes in the approved waiver should be made via the submission of a waiver
amendment. For example, if a state finds it necessary to reduce the waiver participant cap
because state appropriations will not support the number of persons specified in the waiver, the
state should submit an amendment to reduce the participant cap specified in Appendix B-3 of the
application.
A state may propose that an amendment take effect prospectively on some future date. An
amendment also may be made retroactive to the first day of a waiver year (or another date after
the first day of the waiver year) in which the amendment is submitted unless the amendment
includes changes that are substantive. Per 42 CFR § 441.304(d)(2), waiver amendments that
include changes that are substantive may take effect only on or after the date of CMS approval.
Per 42 CFR § 441.304(d)(1), substantive changes include but are not limited to: Revisions to
services available under the waiver including elimination or reduction of services or reduction in
the scope, amount, and duration of any service; A change in the qualifications of service
providers (this includes a reduction of providers); Changes in rate methodology, or a constriction
in the eligible population (for example, a reduction in the number of persons served, slots
available, or adding reserved capacity without also increasing number of persons served/slots).
Some additional examples of substantive changes include consolidating waivers, adding services,
changes to settings, and changes in the quality improvement system such as adding or deleting
sub-assurances or adding or deleting reporting requirements. Please note that typically, in
increase in the unduplicated number of participants is not considered to be a substantive change.
A retroactive effective date is permissible in a waiver amendment that only includes changes that
are not substantive such as for the purpose of increasing the unduplicated number of participants.
The state is required to establish a public input process specifically for HCBS waiver changes
that are substantive in nature. Substantive changes should be accompanied by information on
how the state has assured smooth transitions and minimal adverse impact on individuals
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Instructions: Version 3.7 HCBS Waiver Application

impacted by the change. When an amendment would have the effect of reducing the number of
waiver participants, the state also should review CMS guidance in State Medicaid Director letter
#01-006 Olmstead Update #4 (located in Attachment C).
As a result of its review of the annual waiver report (CMS-372), CMS may instruct the state to
submit a waiver amendment when the CMS review reveals that the state is serving a significantly
greater number of persons than provided in the approved waiver, actual waiver expenditures
substantially diverge from the amounts in the approved waiver, or the state is providing services
not included in the approved waiver. When the annual waiver report reveals that the waiver may
not be cost-neutral, CMS may instruct the state to take remedial actions to correct the problem
(see the next part of the instructions).
Related Topics
CMS Technical Assistance
States are encouraged to confer with CMS when preparing preliminary initial and renewal
waiver applications or significant amendments in advance of their formal official submission to
CMS. Such informal consultation prior to the formal submission may expedite CMS review of
the formal submission. States also may request technical assistance concerning waiver
operations. Technical assistance should be requested through DHCBSO, which will confer with
DLTSS as necessary to address questions or technical aspects of the proposed waiver.
Administrative Claiming
Some activities such as case management, supports broker, and financial management services
may be provided as a Medicaid administrative activity rather than as a waiver service. In
accordance with 45 CFR Subpart E (45 CFR § 95.501 through 45 CFR § 95.519), states must
ensure that any such administrative costs, necessary for the efficient administration of the
Medicaid State Plan, are consistent with a CMS-approved cost allocation plan. Please note that
cost allocation plans are not approved via approval of a 1915(c) HCBS waiver application.
Waiver Termination
There are three potential processes for terminating waivers, depending on the circumstance:
•

A state may elect to terminate the operation of an approved waiver before its expiration date:
o As provided by 42 CFR § 441.307, when the state elects to terminate the waiver prior
to its expiration date, the state must notify CMS in writing, in the form of a waiver
amendment, at least 30-days in advance before terminating services to waiver
participants.
▪ Under the ‘purpose of the amendment’, the state should indicate that the waiver is
being terminated and should indicate the termination date.
▪ A transition plan should be included in Attachment #1. If phasing into another
authority, this transition plan should be accounted for in the accepting authority.
▪ If the state is phasing out the waiver, there should be a phase-out schedule, factor
c should be adjusted/and or the phase out of slots should be addressed in the
transition plan and estimates in Appendix J updated.
o As provided in 42 CFR § 431.210, the state must notify waiver participants at least 30
days in advance of the change.

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Instructions: Version 3.7 HCBS Waiver Application

•

A state may elect to terminate the operation of an approved waiver and allow it to expire at
the end of the approved waiver cycle:
o The state is required to notify CMS at least 30 days in advance via a letter to CMS
when individuals are all transitioned at one time. A waiver amendment for closing
the waiver is not required.
▪ The state must include in their notice to CMS what will happen to current
participants when the waiver ends.
▪ In most cases, they may have been transitioned to another waiver or authority, or
the state may have phased out the waiver.
o Please note that a waiver amendment is required when individuals are being
transitioned over a period of time, when waivers are being combined, subsumed, or
participants are being transitioned to other authorities.
o In transitioning individuals, requirements for notice to participants must be met. The
state must notify waiver participants at least 30 days in advance of the change.

•

As provided in 42 CFR § 441.304(d), CMS may terminate a waiver when it finds that the
state is not meeting one or more waiver requirements (e.g., the state has not assured the
health and welfare of waiver participants or the waiver is not cost neutral). CMS may
terminate a waiver for one or more of the following reasons:
o The health and welfare of waiver participants has been jeopardized;
o The waiver is not cost-neutral;
o The state has not submitted required annual waiver reports;
o Accurate financial records have not been maintained to document the cost of waiver
services;
o The waiver has not been operated in a manner consistent with the approved waiver;
and/or
o The waiver has not been operated in accordance with other applicable federal
requirements.

When CMS determines that it is necessary to terminate a waiver, it gives the state notice of its
findings and the opportunity for a hearing to rebut these findings. After the notice and hearing,
CMS may terminate the waiver. As provided in 42 CFR § 441.308, the procedures specified in
Subpart D of 42 CFR § 430 apply to a state’s request for a hearing concerning a waiver
termination. If CMS terminates the waiver, the state must notify affected waiver participants at
least 30-days in advance before terminating their services.
Post Approval Activities
Overview
This section briefly addresses the following topics:
•
•
•

Preparation and submission of the annual section 1915(c) waiver report;
On-going dialogue between the state and CMS concerning waiver operations; and
CMS report to the state prior to waiver renewal.

Annual Waiver Report
As provided in 42 CFR § 441.302(h) (which implements section 1915(c)(2)(E) of the Act):

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Instructions: Version 3.7 HCBS Waiver Application

“annually, [the state] will provide CMS with information on the waiver’s impact. The
information must be consistent with a data collection plan designed by CMS and must address
the waiver’s impact on—
(1) The type, amount, and cost of services provided under the state plan; and
(2) The health and welfare of recipients.”
The state must assure that it will prepare and submit the annual waiver report as a condition of
the approval of the waiver.
Annual Report Form CMS-372(S)
In order to satisfy the annual waiver report assurance, a state must annually prepare and submit
the form CMS-372(S) (Simplified) report in the 372 report section of the online waiver
management system (WMS). The form CMS-372(S) report, also known as the 372 report, aligns
the annual waiver report with the simplified waiver cost-neutrality formula (see instructions for
Appendix J).
The CMS-372 report ensures that a state reports for each waiver year financial/statistical and
other information about the waiver. This information includes:
•
•
•
•
•
•

•

the unduplicated number of persons who participated in the waiver during the waiver
year;
the number of participants who utilized each waiver service;
the amount expended for each waiver service and for all waiver services in total;
the average annual per participant expenditures for waiver service;
the total number of days of waiver coverage for all waiver participants and the average
length of stay (ALOS) on the waiver;
expenditures under the state plan for non-waiver services (including services required
under Early and Periodic Screening, Diagnostic and Treatment (EPSDT) requirements
when the waiver serves children under the age of 21) that were made on behalf of waiver
participants and average per participant expenditures for such services (based on the
number of participants who utilized such services); and,
evidence that demonstrates how the state continues to meet the waiver quality
assurances.

The CMS-372(S) reports the actual performance of a waiver against the prospective costneutrality demonstration in Appendix J of the revised waiver application. The financial and
statistical data reported via the CMS-372(S) also serves as the baseline for the prospective
demonstration of cost-neutrality when the state submits a renewal application for an approved
waiver.
The quality performance measure evidence includes data for each performance measure and
information about how the state monitors performance in each of the waiver quality assurances
and sub-assurances, as well as evidence of discovery, remediation and improvement activities for
all of the waiver assurances. Additionally, under the health and welfare assurance, the state
provides an aggregated report on the individual remediation of substantiated instances of abuse,
neglect, and exploitation.
CMS reviews the annual CMS-372(S) report as part of its ongoing oversight of the operation of
HCBS waivers. This review is discussed in the Review of the Annual Waiver Form CMS48
Instructions: Version 3.7 HCBS Waiver Application

372(S) Report section. In addition, in accordance with 42 CFR §§ 441.302-305, for CMS
consideration of a waiver renewal application, the state must have submitted, and CMS accepted
CMS-372(S) reports through the next to last year of the period that the approved waiver is in
effect. If the state is unable to prepare timely and acceptable CMS-372(S) reports, the renewal of
the waiver may be jeopardized.
Preparation and Submission of the Form CMS-372(S) Report
As noted previously, in accordance with 42 CFR §§ 441.302-305, all state Medicaid agencies
administering or supervising the administration of HCBS waivers are required to submit an
annual 372 Report in WMS for each approved waiver. The first report for each waiver must
have data from the new or renewed waiver effective date (and, for subsequent reports in the
waiver cycle, the anniversary of that date) to the end of one full year thereafter. A separate 372
Report is expected for temporary extension (TE) periods granted by CMS while a waiver's
renewal is pending if the extension period is not subsumed into the renewal period. A 372
Report is also expected for each extension year, plus a separate report for each additional portion
of a year during which the waiver operated on a TE that is not subsumed into the renewal.
Similarly, if a waiver only operated for part of a year and was terminated, a 372 Report for that
portion of the year in which the waiver was in effect needs to be submitted.
WMS 372 Report Summary Section
States have six months after the end of each waiver year to report on quality assurance
requirements and an additional 12 months for financial reporting. As a result, the annual 372
Report includes quality assurance information for the most recent waiver year just ended and
financial information for the waiver year prior to the year with the most recent quality
information. Therefore, the following information will be different for the data and quality
sections of the 372 Report:
•
•
•
•

Waiver Year identifies which year in the waiver’s three- or five-year cycle is covered by
the 372 Report
Begin Date is the first day of the waiver year covered by the 372 Report
End Date is the last day of the waiver year covered by the 372 Report
Report Period Year is the year included in the end date of the 372 Report waiver period

The 372 report types are defined as follows:
•
•
•

Initial Report – The initial report includes information for the most recent waiver
year. This report type typically applies to the quality section and is due six months
following the last day of the applicable waiver year.
Lag Report – The lag report includes information for the year previous to the most recent
waiver year. This report type typically applies to the data (financial) section and is due
18 months following the last day of the applicable waiver year.
Temporary Extension (TE) Report – The TE report includes information for waiver
extension periods granted by CMS while a waiver’s renewal is pending if the extension
period is not subsumed into the renewal period. The waiver year selected must be the
final waiver year in the waiver’s cycle, e.g. Year 5. A separate report is due for each year
and/or each portion of a year during which the waiver operated on a temporary extension.

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WMS 372 Report Data Section
The data section of the 372 Report requires data that will be compared to estimates approved in
the waiver to determine if the waiver meets the cost neutrality requirement. The following
provides an explanation of certain data elements as specified in 42 CFR § 441.303:
•

•
•

Unduplicated Participants (Factor C) – Data on participants is reported based on
annual unduplicated individuals, (not cases, slots, or families) also known as Factor C.
To be counted as a waiver participant, an individual must have received one or more paid
waiver services during the reporting period. For example, if a participant is served under
the waiver on multiple occasions during the year with an intervening period of
institutionalization, that individual is only counted as one unduplicated participant.
Days of Waiver Enrollment – The number for days of waiver enrollment is the total
days of waiver coverage for the unduplicated participants.
Average Length of Stay (ALOS) – The ALOS is computed by dividing the total number
of days of enrollment by the number of unduplicated waiver participants. Data should be
included all days as follows:
o Begin with the later of
▪ The first day of waiver enrollment, or
▪ The first day of the reporting period.
o End with the earlier of:
▪ The last day of waiver program enrollment, or
▪ The last day of the reporting period.
Total Waiver Expenditures – Total waiver expenditures should be reported in whole
dollars and represent the total computable expenditures.
Average per Capita Waiver Services (Factor D) – The average per capita annual
expenditure for section 1915(c) HCBS provided to the total number of waiver recipients
for each level of care in the approved waiver.
To compute the average per capita expenditures for each level of care in the approved
waiver, the sum of the annual expenditures for CMS-approved §1915(c) waiver services
for each column is calculated. This sum is divided by the total number of unduplicated
participants of these services reported for that level of care. The result is the average per
capita expenditures for CMS-approved section 1915(c) waiver services to waiver
participants.

•

Average per Capita (APC) for State Plan Services (Factor D’) – The average per
capita annual expenditures for all other Medicaid services for which Medicaid payment
was made for participants during the time they received section 1915(c) waiver services.
This includes state plan services and services above and beyond medically necessary
EPSDT services not included in the state plan. Factor D' includes all other Medicaid
costs not included in factor D.
Institutional costs in a waiver year for participants in the institution before they enter the
waiver are not included in the computation of factor D'. If an individual is in the waiver
and during the waiver year enters an institution and subsequently returns to the waiver in
that waiver year, those institutional costs should be included in Factor D'. If an
individual is in the waiver and during the same year enters an institution but does not

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Instructions: Version 3.7 HCBS Waiver Application

return to the waiver during that waiver year, those institutional costs would not be
included in Factor D' because the participant is no longer in the waiver.
•
•
•
•

•

APC Total (D + D’) – The average per capita total for waiver services is Factor D +
Factor D’.
Factor G Value – The estimated annual average per capita Medicaid cost for hospital,
NF, or ICF/IID care that would be incurred for participants served in the waiver, were the
waiver not granted.
Factor G’ Value – The estimated annual average per capita Medicaid costs for all
services other than those included in factor G for participants served in the waiver, were
the waiver not granted.
APC Total if No Waiver (G + G’) – The average per capita total for long-term care
participants with no waiver granted is Factor G + Factor G’. The estimated sum of G +
G’ approved in the waiver, rather than updated actual numbers should be entered. If the
state chooses to provide updated numbers, certification on accuracy of the data and a
brief explanation as to how the data was derived must be included in the additional
information box.
Cost Neutrality – To compute the cost-neutrality formula, the computation to ensure that
the sum of D + D' is less than or equal to the estimated sum of G + G' is completed. If
after completing the computation the waiver is not cost-neutral, an explanation in the
additional information section explaining why the waiver failed to demonstrate cost
neutrality should be included. Action needs to be taken to amend the waiver for future
years, and immediately correct the problem or the waiver may be terminated by CMS.
(See 42 CFR § 441.304(d).)
Annual Number of Section 1915(c) Waiver Participants and Expenditures – Each
service should be specified as it is listed in Appendix J of the approved waiver and the
number of unduplicated waiver participants, who received each waiver service by level of
care in the approved waiver should be entered.
The total number of unduplicated waiver services participants is then entered. This
number represents, by level of care in the approved waiver, the number of unduplicated
participants, who received waiver services.
The actual annual Medicaid expenditures for each approved home and community-based
waiver service received by waiver participants during the reporting period by level of
care should be entered.

•

Reporting Managed Care – The following instructions describe how expenses should
be reported when section 1915(c) waiver services are provided via managed care and the
state is unable to determine the actual expenses per service because they are included in
the capitated payment.
o The following should be reported in the Additional Information text box:
▪ Name of managed care (MC) program;
▪ Number of unduplicated MC participants, who received waiver services;
and
▪ Per member per month (PMPM) cost.
o The following should be reported in the Annual Number of section 1915(c)
Participants and Expenditures Table:
▪ Service Name - “Managed Care” should be specified as a service name;
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Instructions: Version 3.7 HCBS Waiver Application

▪

Participants – The total number of unduplicated participants, who received
managed care through the waiver should be reported; and
▪ Expenses are calculated in $ as follows:
a. The average number of months services were received per
participant: ALOS / 30.42 days = months rounded to the nearest
hundredth (e.g. ALOS 171 days / 30.42 days = 5.62 months); and
b. The total expense per year: unduplicated participants x the PMPM
cost x average months services received (e.g. 2,000 unduplicated
participants x $4,500 PMPM x 5.62 = $50,580,000 Expense in $).
o The Add Service Line link at the bottom of the page should be used to list the
following for each service provided via managed care:
▪ Service Name - Name of service provided via managed care;
▪ Participants - Number of unduplicated participants, who received the
managed care service; and
▪ Expenses in Percent - Percentage of the total unduplicated participants,
who received the service, e.g. Residential Habilitation. For example, there
are 2,000 unduplicated participants, who received section 1915(c) waiver
services, but only 500 of them received Residential Habilitation services
via managed care. The percent of unduplicated participants who received
managed care Residential Habilitation would be calculated by dividing
500 by 2,000 = .25 or 25%.
372 Report Quality Section
States have six months after the end of each waiver year to report on the quality assurance
requirements. The prepopulated information in this section is pulled directly from the applicable
approved section 1915(c) waiver. States need to provide data for each performance measure as
evidence demonstrating that each quality assurance is met. When a deficiency is identified,
information about how it will be remediated is expected to be included.
Review of the Annual Waiver CMS-372(S) Report
CMS reviews the financial and statistical information submitted by the state to validate that the
section 1915(c) waiver meets regulatory requirements specified in 42 CFR §§ 441.302-305. The
review may require the following actions by the state:
•

•

Waiver Amendment. If the review of the annual waiver report reveals that the number
of waiver participants is significantly greater than the number estimated by the state in
the approved waiver and/or waiver expenditures (in total or on an average per participant
basis) exceed those estimated in the approved waiver, the state may be required to submit
an amendment to the approved waiver to align the demonstration of cost neutrality in the
approved waiver to actual experience. States are expected to monitor waiver utilization
and expenditures and submit amendments as necessary. It is not necessary to submit an
amendment to reflect minor differences in the number of waiver participants or the
utilization or costs of specific waiver services. So long as the annual report confirms that
the waiver meets the cost-neutrality assurance, these types of amendments will be treated
as “technical” in nature.
Potential Violations of the Cost-Neutrality Assurance. When the annual waiver report
reveals that the waiver does not meet the cost-neutrality assurance (i.e., the annual
average per capita cost of supporting individuals on the waiver exceeds the annual
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Instructions: Version 3.7 HCBS Waiver Application

average cost of individuals who receive institutional services at the waiver’s level of
care), the state may be required to initiate corrective action to bring the waiver into
alignment with the cost-neutrality requirement. The implementation of the necessary
corrective actions may entail the submission of amendments to the approved waiver. If
the state fails to initiate satisfactory corrective actions, CMS may terminate the waiver or
disapprove its renewal. It is expected that states monitor waiver expenditures and initiate
corrective actions as necessary to assure the cost-neutrality of the waiver.
Ongoing CMS-State Dialogue During the Waiver Period
During the waiver period, DHCBSO has oversight of state waiver operations and making a
determination that the waiver has been operated in accordance with the approved application and
that the state has met the waiver assurances and related federal requirements. CMS urges that
states engage in an on-going dialogue with DHCBSO about the operation of the waiver. This
dialogue may include discussions of changes to improve waiver operations, involving DHCBSO
in problem solving to address issues that might arise in waiver operations, and keeping
DHCBSO apprised of progress in implementing the waiver’s quality improvement strategy
(QIS).
When appropriate and necessary, DHCBSO will involve DLTSS in this dialogue. CMS can
provide assistance to states in designing a QIS or the design of systems to address specific
aspects of quality improvement.
CMS Oversight of State Waiver Operations
CMS will utilize the quality information provided in the Form CMS-372(S) Report combined
with information obtained by DHCBSO throughout the waiver period to determine the state’s
quality performance. DHCBSO may also visit states to observe and learn about the operations of
the program. CMS may find it necessary, in certain circumstances, including when the health
and welfare of waiver participants may be jeopardized or the waiver is not being operated in
accordance with other applicable federal requirements, to conduct special or focused on-site or
off-site review activities. Prior to launching a special review, DHCBSO will identify to the state
the types of information that it requires in order to perform the review. When CMS determines
that such a review is necessary, it will notify the state of why the review is being undertaken. The
results of this type of review may necessitate the state’s preparing and implementing a corrective
action plan.
CMS Report to the State Prior to Waiver Renewal
CMS will issue a draft quality review report to the state summarizing its quality performance
findings and conclusion. The report may include recommendations. If the draft report concludes
that one or more assurances are not demonstrated, DHCBSO will provide the basis for the
conclusion In response to the draft report, the state may dispute the CMS findings or propose a
course of action to remediate the problem, either immediately or by implementing a corrective
action plan with milestones to resolve the problem(s). If the state does not propose a satisfactory
course of action, CMS may not approve the state’s waiver renewal application. A final report
incorporating the state’s response will be issued approximately 12 months prior to the waiver’s
expiration.

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Instructions: Version 3.7 HCBS Waiver Application

Detailed Instructions for the Completion of the Version 3.7 1915(c) HCBS Waiver
Application
Overview
The detailed instructions for completing the Version 3.7 1915(c) HCBS Waiver Application are
divided into two parts:
•
•

The first part (Using the Application) provides information about completing the webbased application. It discusses the formatting of the application and provides additional
information about various elements of the application.
The second and larger part (Detailed Instructions) contains module-by-module, item-byitem application instructions. These instructions include technical guidance (where
applicable) and the review criteria that CMS applies in reviewing waiver applications.

Using the Application
Overview
The web-based application links relevant parts of the application and ensures that the application
is complete when it is submitted. The web-based application format includes technical
instructions for its use.
Technical instructions for use of the web-based application are available at https://wmsmmdl.cms.gov/WMS/faces/portal.jsp. In addition, each state has a designated systems
administrator (within the Medicaid Agency) who provides state user access and assigns roles
related to the use of the application.
Please note that there is no means to load a draft application prepared in word processing
software into the web-based application tool. Text may be copied and pasted; selections must be
made manually.
Application Format
The application is formatted so that many items in the revised application can be completed by
making a selection from a pre-specified list of responses. Other items require text responses.
There are two types of response lists where a state responds to an item by selecting from a prespecified list that contains two or more potential responses. Some application items combine
both types of selectable choices. These types of lists are:
•

No more than one selection permitted from among two or more possible choices.
Some items provide for the selection of only one of two or more pre-specified choices.
Items of this type appear in the application in the following format and are cued by the
instruction “select one”:

The state is a (select one):


§1634 State



SSI-Criteria State



209(b) State

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Instructions: Version 3.7 HCBS Waiver Application

For items of this type (where selectable choices are indicated by the “” symbol), select one and
only one of the pre-specified responses. The web-based application is designed so that it is only
possible to make only one selection in items of this type.
•

More than one selection from several choices. In the case of other items, the
application permits selecting more than one of the listed responses. Items of this type
appear in the application in the following format and are cued by the instruction “check
each that applies”. An example of this type of item is as follows:

a. Responsibility for Service Plan Development. Per 42 CFR § 441.301(b)(2), specify
who is responsible for the development of the service plan and the qualifications of these
individuals. Given the importance of the role of the person-centered service plan in
HCBS provision, the qualifications should include the training or competency
requirements for the HCBS settings criteria and person-centered service plan
development. (check each that applies):
 Registered nurse, licensed to practice in the state
 Licensed practical or vocational nurse, acting within the scope of practice under
state law
 Licensed physician (M.D. or D.O)
 Case Manager (qualifications specified in Appendix C-3)
 Case Manager (qualifications not specified in Appendix C-3). Specify
qualifications:

 Social Worker. Specify qualifications:

 Other (specify the individuals and their qualifications):

The selectable choices in items of this type are indicated by the “” symbol. In the case of these
types of items, one, two or more of the choices listed may be selected. The selection of one of
the choices does not preclude the selection of the other choices. The web-based application
permits multiple choices to be made in items of this type.
In some cases, the selection of a pre-specified response from a list may prompt completing
subsequent items or direct skipping the subsequent items and going on to a later item. Linkages
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Instructions: Version 3.7 HCBS Waiver Application

among items are programmed into the web-based application. For example, if a response to one
item permits skipping another item, the affected subsequent item is not available for completion
in the web-based application.
Where the application requires a text response (for example, when the application requires that a
policy or practice must be specified), the response is inserted into a text field. Text fields appear
in the application as follows:

Text fields sometimes standalone. This is the case when only a narrative response is required to
complete an item. In other instances, text fields are associated with choices in an application
item (as in the foregoing example). The size of a text field as it visually appears in the web-based
application is not to be understood as depicting the expected or desired length of a response.
Text fields will accommodate responses that are longer than the text field that appear in the
application.
In the web-based application, all text fields are character-limited. That is, they will only
accommodate a certain amount of text as measured by a character count (where spaces count as a
character). These limits were established during the web-based application design and further
refined during alpha and beta testing of the web-based application. The web-based application
provides the user information about the character-limits associated with each text field. A
counter above each text box will indicate how many characters have been used and are
remaining. The limits that have been established are generous. However, there are some items
where the limits have been purposely set to restrict the length of a state’s response. In either
application format, one page is 6,000 characters regardless of the physical length of the printout.
When using the web-based application, it may prove to be more convenient to prepare lengthier
text responses using standard word processing software and then copy and paste the text into the
web-based application. It is important to point out that the web-based application only
accommodates plain text. Formatted text (e.g., bolding, italics, underlining), graphics (including
text converted to graphics) and tabular formats cannot be accommodated. This aspect of the
web-based application also means that copying and pasting information from formatted source
documents (e.g., copying a form) generally cannot be accommodated unless copied as plain text.
Additionally, the width of text boxes in the web-based application is fixed.
Italicized text in the application denotes an instruction or sometimes provides a brief explanation
of an item or application component.
The application is designed to be a self-contained document. The web-based application does not
accommodate submission of supplementary electronic files or paper documents. Therefore, the
Version 3.7 format also does not reference supplementary material.
As necessary and appropriate, a state may cite applicable laws, policies or regulations in its
response to an item but should not attach these materials to the application. If, during the course
of its review, CMS finds it necessary to examine materials that are referenced in the application,

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Instructions: Version 3.7 HCBS Waiver Application

the state will be asked to furnish them. When such materials are provided in response to a CMS
informal or formal request, they are not considered to be part of the waiver application.
When materials are referenced or cited in the application, they must be readily available through
the state Medicaid agency and/or the waiver operating agency (if applicable) should CMS
request the materials. It is not necessary that the state Medicaid agency maintain printed copies
of all referenced or cited materials. Materials may be maintained in electronic format.
Detailed Instructions, Technical Guidance and Review Criteria
This part of the instructions is divided into modules which include section-by-section, item-byitem directions for completing the HCBS waiver application. Where appropriate, technical
guidance is provided about an item or topic. CMS review criteria associated with an item or
items also are included. The instructions are keyed to the application.

Application for a §1915(c) Home and
Community-Based Services Waiver
(Module 1)
Overview
This component of the application includes the following sections:
•
•
•
•
•
•
•
•

Basic information about the waiver request;
A brief description of the waiver;
A recap of the waiver application components;
The waiver(s) requested by the state;
The assurances that the state must make concerning the operation of the waiver;
Additional requirements associated with the operation of a waiver;
State contact information; and
The signature of the State Medicaid Director or designee transmitting the application.

1. Request Information
Overview
This section provides basic information about the waiver.
Item 1-A: State
Instructions
In the web-based application, the state name is entered automatically.
Item 1-B: Waiver Title
Instructions
If the waiver has a title (e.g., “Innovations Waiver”), enter the title. Otherwise, leave blank.

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Item 1-C: Type of Request
Instructions
From the choices provided, select the type of request. In the case of a renewal request, a request
for a new waiver to replace an existing waiver or an amendment to an approved waiver, enter the
CMS waiver control number of the approved waiver. Regular waivers have a four-digit waiver
control number assigned by CMS plus extensions (when applicable) that indicate previous
renewals (e.g., the number 0999.90 indicates that the waiver has previously been approved once
for renewal). In the case of a model waiver, the waiver control number is a five-digit number
plus extensions. In the web-based application, this item is pre-filled based on the selection that is
made when the state initiates a new request.
Technical Guidance
Refer to the “Waiver Application Submission Requirements, Processes, and Procedures” section
of the instructions for a discussion of policies and other considerations regarding new waivers,
new waivers to replace an approved waiver, and waiver renewals. Also see instructions
regarding Attachment #1 for submitting transition plans when a new waiver is to replace an
approved waiver, and the other circumstances where a transition plan may be required. Please
consult CMS directly to discuss particular situations. Please note that if the state requests a fiveyear initial waiver per the requirements of Section 2601 of the Affordable Care Act, the state
must assure that the waiver provides services to individuals who are eligible for both Medicaid
and Medicare.
CMS Review Criteria
•
•

The type of request (i.e., new waiver, renewal, amendment) has been specified by the
state.
For new waivers, the state has indicated the requested approval period (i.e., 3 years or 5
years).

Item 1-D: Type of Waiver
Instructions
Select the type of waiver that is requested.
Technical Guidance
A “model” waiver is limited to serving no more than 200 individuals at any point in time during
the waiver period. A model waiver may serve fewer than 200 persons, depending on the
participant limit that a state establishes (as specified in Appendix B-3). Except for assuring that
the waiver will serve no more than 200 individuals at any point in time, “model” and “regular”
waivers are no different. A regular waiver also may serve a relatively small number of
individuals.
A state may subsequently convert a model waiver to a regular waiver in order to serve more than
200 individuals. The conversion may be requested via the submission of a waiver amendment or
when the waiver is renewed. Provided that no other major changes are proposed, the conversion
of a model to a regular waiver is not considered to be a request for a new waiver. When
conversion is requested via the submission of an amendment, the period that the waiver is in
effect does not change.
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Item 1-E.1: Proposed Effective Date
Instructions
Enter the proposed effective date of the waiver.
Technical Guidance
The effective date is the first day that the waiver will be in operation. In order to facilitate
annual waiver reporting, a new waiver should have an effective date that falls on the first day of
a month or the beginning of a calendar quarter. Also, in the case of new waivers, the proposed
effective date should be at least 90-days from the date of application submission in order to allow
sufficient time for CMS review of the application and a subsequent prospective effective date.
In the case of a renewal application or a new waiver that replaces an approved waiver, the
proposed effective date should be the day after the approved waiver expires. If a temporary
extension has been granted, the effective date may subsume all, part or none of the extension
period.
In the case of an amendment, the proposed effective date is the date that the amendment would
take effect. Again, keep in mind that any changes included in the amendment must be effective
on the same date. See also Policies Concerning Waiver Amendments for a discussion of when
amendments may be made effective.
Item 1-E.2: Approved Effective Date
Instructions
This item is reserved for CMS use. When the application is approved, CMS will enter the
approved effective date. If this date is different from the proposed effective date, the application
will be revised to reflect the approved effective date.
Item 1-F. Level(s) of Care
Instructions
Select the level or levels of care that individuals must require in order to be considered for
entrance to the waiver. As applicable, specify the specific type of institutional setting or
subcategory of a level of care.
Technical Guidance
Waiver services may only be furnished to individuals who are determined to require the level of
care furnished in a hospital, nursing facility or ICF/IID when the costs of such institutional care
are reimbursable under the state plan. The waiver must specify the level(s) of care that
individuals require in order to enter the waiver. More than one level of care may be selected,
depending on the target group(s) served in the waiver. For example, if the waiver is designed to
support medically fragile children in the community, it may be appropriate to select both the
hospital and nursing facility levels of care.
Level of care is one of several application elements that, when taken together, specify the target
population of Medicaid beneficiaries who may participate in the waiver. In Appendix B-1, the
state further specifies the waiver’s target group(s) (i.e., the specific groups or subgroups of
individuals who require the level of care that is specified here – for example, older persons – and
may receive waiver services). In Appendix B-4, a state also specifies the Medicaid eligibility

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groups that may be served in the waiver. In Appendix B-6, the process by which the level of
care of potential entrants to the waiver is evaluated and re-evaluated is described.
When completing this item, it is important to keep in mind that, per 42 CFR § 441.301(a)(6), a
waiver may, at the state’s option, serve one or more of the following three groups of Medicaid
beneficiaries or subgroups thereof:
•
•
•

Aged and/or disabled;
Persons with intellectual disability and/or developmental disabilities; or
Persons with serious mental illnesses.

These three groups are discussed in more detail in the instructions for Appendix B-1.
Only in limited circumstances may the ICF/IID level of care be combined with another level of
care. As provided in CMS State Medicaid Director letter #01-006 Olmstead Update #4 (included
in Attachment C), when a waiver serves persons who have experienced a brain injury, the waiver
may serve individuals who require ICF/IID level of care (when the brain injury occurred at a
young age) and persons who experienced a brain injury at a later age who may require the
nursing facility or hospital level of care.
A waiver may not serve individuals between the ages of 22 and 64 who would, but for the
waiver, receive services in an Institution for Mental Disease (IMD). The reason is that, under
section 1905(a) of the Act, federal financial participation is not available for the costs of services
furnished in an IMD to individuals in this age range. However, individuals with serious mental
illnesses in this age range who require the nursing facility level of care according to a
Preadmission Screening and Resident Review (PASRR) determination may receive waiver
services. See the Appendix B-1 instructions for a more detailed discussion of this topic. A
waiver may serve persons age 65 and older with serious mental illnesses who would otherwise
reside in an IMD when the state plan provides for the reimbursement of IMD services under the
provisions of 42 CFR § 440.140. A waiver also may serve children and youth with serious
emotional disturbances who require the level of care furnished in inpatient psychiatric facilities
for individuals under age 21 when the services furnished in such facilities are included in the
state plan as provided in 42 CFR § 440.160 and are provided in a facility licensed as a hospital.
Except as provided in Section 6063 of the Deficit Reduction Act of 2005 (P.L. 109-171), a
waiver cannot serve as an alternative to services in a Psychiatric Residential Treatment Facility
(PRTFs – as defined in 42 CFR § 483.352) that serve children and youth since section 1915(c) of
the Act does not authorize waivers as an alternative to PRTFs.
Some states have established subcategories of the major level of care categories (e.g., skilled and
intermediate care nursing facility services). A state may limit the waiver to one or more of these
subcategories (e.g., a state may have defined multiple levels of ICF/IID care but decides to limit
the waiver to individuals who qualify for one or more of the specific levels). It is permissible for
a state to target the waiver in this fashion provided that the level of care subcategories is
incorporated into the state plan. If the state wishes to limit the waiver in this fashion, specify the
subcategories (e.g., Rehabilitation Hospital under the hospital category). If subcategories are not
specified in the state plan or, if they are specified, but the state does not wish to limit the waiver
to specified subcategories, insert “not applicable.” Keep in mind that in Appendix B-1, the
waiver target population may be further specified by age, group, condition, and other factors.

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When the waiver serves individuals, who require different levels of care, the demonstration of
cost-neutrality in Appendix J is affected. Cost neutrality calculations are based on the Medicaid
state plan costs associated with individuals who have the level of care specified for the waiver.
When more than one level of care is selected, in order to meet the requirements at 42 CFR §
441.303(f), cost neutrality calculations must be based on the calculation of a weighted average
across the levels of care (see instructions for Appendix J-1).
CMS Review Criteria
• The level(s) of care proposed complies with 42 CFR § 441.301(a)(3).
• The state’s proposed level(s) of care aligns with the target group definition contained in
Appendix B-1.
• When subcategories of a level of care are specified, the subcategories are contained in the
approved state plan.

Item 1-G: Concurrent Operation with Other Programs
Instructions
Indicate whether the waiver is or will be operated concurrently with a program that is operated
under one of the other authorities listed. If the waiver will operate concurrently with a section
1915(b) waiver, specify the program and indicate whether a section 1915(b) waiver application
has been submitted simultaneously or has been previously approved. Similarly, if the waiver
will operate concurrently with a program authorized under section 1115 of the Act, specify the
program and indicate whether a section 1115 waiver application has been submitted
simultaneously or has been previously approved. In addition, the state should indicate here if the
waiver is operating concurrently with a contract approved under section 1915(a) of the Act, a
state plan amendment under section 1915(i) of the Act, a state plan amendment under section
1915(j) of the Act, or a state plan amendment under section 1915(k) of the Act. If the waiver
does not operate concurrently with another program, select “not applicable.”
Technical Guidance
An HCBS waiver may operate concurrently with programs approved under other authorities in
the Act. For the purpose of this item, “concurrent operation” means that the operation of the
HCBS waiver is directly tied to the use of another authority in the Act. For example, some states
operate concurrently section 1915(b)/§1915(c) waivers wherein the section 1915(b) authority is
used to obtain waivers of provisions of the Act in addition to the waivers that may be granted
under section 1915(c). Some of these programs employ managed care service delivery methods
to furnish HCBS waiver and other state plan services to Medicaid beneficiaries.
This item does not apply when HCBS waiver participants only receive Medicaid state plan health
care services through managed care or Primary Care Case Management (PCCM) arrangements
that are furnished under another authority. It only applies when the delivery of waiver services is
affected by the use of another authority. Please see the Appendix I instructions for a discussion
of the section 1915(a) authority.
As discussed in the “Waiver Application Submission Requirements, Processes, and Procedures”
section of the instructions, when a state wants to launch a concurrent managed care/section
1915(c) waiver, separate managed care and section 1915(c) waiver applications must be
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submitted because CMS must review each application simultaneously. Once a concurrent
section 1915(b)/ §1915(c) waiver is approved, the renewal of each waiver is subject to the
timelines under each authority (two or five years for the section 1915(b) waiver and three or five
years for the section 1915(c) waiver). Should the section 1915(b) waiver expire or terminate
prior to expiration, the state must amend the section 1915(c) accordingly.
CMS Review Criteria
• Both waiver applications have been submitted and have the appropriate proposed effective
dates.
• In the case of a new concurrent authority, the section 1915(c) waiver may only be
approved when the concurrent authority has been approved and vice versa.
Item 1-H: Dual Eligibility for Medicaid and Medicare
Instructions
Check the box if the Waiver provides services for individuals who are eligible for both Medicare
and Medicaid.
2. Brief Waiver Description
Instructions
In one page or less (6,000 or fewer characters), briefly describe the purpose of the waiver,
including its goals, objectives, organizational structure and service delivery methods.
Technical Guidance
The brief description provides CMS with an overview of the waiver’s role in supporting
individuals in their homes and communities and, thereby, facilitates CMS review of the
application.
There is no pre-specified format for this brief description. However, the description should
include: a discussion of the program’s purpose (e.g., rebalance resources between institutional
and community services or provide community alternatives for children who have complex
medical conditions who otherwise would be hospitalized); its goals (e.g., facilitate the
community transition of institutionalized persons or implement participant direction in three
regions of the state); its objectives (e.g., transition 200 persons to the community each year of the
waiver period); organizational structure (e.g., the state agency responsible for operating the
waiver and how individuals access services at the local/regional level); and, service delivery
methods (e.g., the use of participant-directed or traditional service delivery methods). The brief
description also may address other topics that the state believes will contribute to CMS
understanding of what the state is seeking to accomplish through the operation of the waiver.
3. Components of the Waiver Request
Instructions
Select whether the waiver provides for participant direction of services.
Technical Guidance
This part of the application summarizes the remaining components of the application. It is
included to inform interested persons about the scope and contents of the application. Item E
(Participant Direction of Services) is the only item in this section for which a response is
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required. It asks whether the waiver provides participants the opportunity to direct some or all of
their waiver services. If so, Appendix E must be completed. If not, Appendix E is not
completed.
Before responding to this item, review Appendix E and its instructions. Appendix E revolves
around two opportunities for participant-direction of waiver services: the participant-employer
opportunity and the budget authority opportunity (these opportunities also may be combined).
When a state currently does not provide for participant direction, CMS urges that serious
consideration be given to affording waiver participants the opportunity to direct some or all of
their waiver services. States that already provide one or both of these participant direction
opportunities or want to expand the opportunities that are available to individuals must complete
Appendix E.
4. Waiver(s) Requested
Overview
Section 1915(c) of the Act permits the Secretary to grant waivers of three specific provisions of
the Act. As discussed below, all HCBS waiver programs operate under a waiver of section
1902(a)(10)(B) of the Act (comparability). A state also may request waivers of two other
provisions of the Act: statewideness and income/resources. Except for these waivers, HCBS
waivers must comply with all other relevant provisions of the Act unless the waiver also operates
concurrently with waivers granted under other authorities that permit the waiver of additional
provisions of the Act. For example, under the provisions of section 1902(a)(23) of the Act,
waiver participants must be able to exercise free choice in selecting any willing and qualified
provider of waiver services included in their service plan. Should a state wish to limit the
number of providers, it must secure a waiver of section 1902(a)(23) (e.g., by separately
requesting a waiver under the provisions of section 1915(b) of the Act).
Item 4-A: Comparability
Technical Guidance
Section 1902(a)(10)(B) of the Act provides that Medicaid services must be available to all
categorically eligible individuals on a comparable basis (e.g., services available to adult
beneficiaries with disabilities cannot be different in their amount, scope and duration from the
services that are available to other adult beneficiaries). HCBS waivers target services only to
specified groups of beneficiaries (e.g., persons with developmental disabilities or older persons)
rather than making them available to all beneficiaries. Thus, a waiver of section 1902(a)(10)(B)
is an integral and necessary feature of all HCBS waivers. HCBS waivers also include services
that are not otherwise available under the state plan and thus not available to beneficiaries who
do not participate in the waiver. In order to make those services available, a waiver of
comparability also is necessary. The waiver application incorporates the request for a waiver of
section 1902(a)(10)(B). Submission of the application constitutes the state’s request for this
waiver.
Item 4-B: Income and Resources for the Medically Needy
Instructions
Select whether the state requests a waiver of section 1902(a)(10)(C)(i)(III) of the Act in order to
use institutional income and resource rules for the medically needy.

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Technical Guidance
If the state elects to cover the medically needy under the waiver, it may request a waiver of
section 1902(a)(10)(C)(i)(III) of the Act so that it may waive the community income and
resource rules that apply to the medically needy and, instead, apply institutional income and
resource eligibility rules. Institutional income and resource rules usually are more generous than
community rules. Application of institutional deeming rules means that income and resources
are not deemed to the person from a spouse or parent; thus, making an individual eligible for
Medicaid who might not otherwise qualify. This permit covering under a waiver medically
needy individuals who may not be eligible for waiver services under community rules but would
be eligible under institutional rules. If the waiver serves the medically needy, indicate whether
or not this section is waived. If the state does not serve the medically needy under its state plan,
check “not applicable.” It is important to point out that the waiver of this provision of the Act
only applies to the medically needy and that population must be served under the state plan in
order for a waiver of section 1902(a)(10)(c)(i)(III) to be requested.
CMS Review Criteria
When a waiver of section 1902(a)(10)(C)(i)(III) is requested:
• The state must cover the medically needy in the state plan.
• The state must include the medically needy in the eligibility groups that may receive
waiver services as provided in Appendix B-4 of the application.
Item 4-C: Statewideness
Instructions
Select whether a waiver of statewideness is requested. If a waiver is requested, specify the type
or types of waivers of statewideness that are requested and provide the information that is
specified.
Technical Guidance
Section 1902(a)(1) of the Act requires that the Medicaid state plan be in effect in all political
subdivisions of the state. As provided in section 1915(c)(3) of the Act, a state may request a
waiver of section 1902(a)(1) in order to operate a waiver on a less than statewide basis. The
Version 3.7 HCBS waiver application provides for requesting two types of waivers of
statewideness:
•

Geographic Limitation. A state may request a waiver of statewideness in order to
furnish waiver services only to eligible persons who reside in specific geographic areas
(e.g., state planning regions or human services catchment areas) or political subdivisions
(e.g., counties or municipalities) of the state. When the waiver is limited to specific
political subdivisions, list the subdivisions. When the waiver is limited to another type of
geographic area (e.g., state planning region), describe the area and, if applicable, include
a reference to the state law or other official document (e.g., governor’s executive order)
that defines the geographic area. The description needs to be specific enough so that the
geographic areas where the waiver is in effect are clearly specified. Absent a waiver of
statewideness, the waiver is considered to be in effect in all parts of the state.
Only request a waiver of statewideness in order to confine the operation of the waiver to
specified geographic areas. A waiver of statewideness should not be requested because
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some waiver services may not be readily accessible in all parts of the state. A waiver of
statewideness may not be requested in order to provide different arrays of waiver services
or administer the waiver differently in different parts of a state under the same waiver. If
the state wants to provide different service arrays or operate differently in different parts
of the state, per CMS State Medicaid Director letter #01-006 Olmstead Update #4
(included in Attachment C), the state would need to apply for a separate waiver for each
area. In other words, where the waiver is in effect, the waiver must operate consistently
in all the areas served by the waiver.
The request for a waiver of statewideness may also provide for the phase-in of the waiver
by geographic area by waiver year. For example, a state may provide that the waiver is
in effect in specified counties during its first year of operation but will be in effect
statewide during the second and subsequent years of the waiver. If the waiver will be
phased-in geographically, request a waiver of statewideness and in the text field specify
the geographic area phase-in schedule. If this schedule changes during the period that the
waiver is in effect, submit an amendment to reflect the revised phase-in schedule.
•

Limited Implementation of Participant Direction. A state also may request a waiver
of statewideness for the purpose of implementing one or both participant direction
opportunities that the state specifies in Appendix E on less than a statewide basis. A
waiver of statewideness for this purpose may be requested in conjunction with a waiver
that otherwise operates on a statewide basis. This waiver may be useful for states that are
interested in affording participants opportunities to direct waiver services but want to
phase-in the implementation of participant direction by geographic area. If the waiver
operates on a less than statewide basis, this waiver may be requested to offer participant
direction opportunities in some but not all the geographic areas where the waiver
operates. This waiver does not permit a state to limit the number of individuals who may
direct their services within the designated geographic locations.
This waiver will be granted only when the waiver participants in the geographic areas
where participant direction is available also have the choice of receiving waiver services
through the service delivery methods that are in effect elsewhere. In other words, this
waiver cannot be granted if participant direction would be the only service delivery
method available to participants in the geographic areas where participant direction is
made available. Participants who reside in the area subject to this waiver must have
access to the same services as participants elsewhere in the state.
Since the implementation of participant direction requires making available additional
supports to participants who direct their waiver services (e.g., financial management
services), a state may include such supports in the waiver but limit their availability
(when covered as a waiver service) to individuals who elect to direct their waiver
services. This limitation should be included in the specification of the scope of the
support service in Appendix C-3.
In requesting this waiver, the same requirements apply with respect to defining the
specific geographic areas where participant direction opportunities will be available as
for a geographic limitation. The waiver also may provide for the phase-in of participant
direction by geographic area by waiver year.

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CMS Review Criteria
• When a waiver of statewideness is requested to limit the operation of the waiver to regions
or areas of the state or to implement participant direction of services in some but not all
areas where the waiver is in effect, the waiver clearly defines the geographic areas where
waiver services and/or participant direction will be available.
• Waiver participants in the geographic areas where participant direction is available also
have the choice to receive waiver services through the service delivery methods that are
in effect elsewhere.
5. Assurances
Overview/Discussion
In order for CMS to approve a new waiver or the renewal of an approved waiver, a state must
make certain assurances concerning the operation of the waiver. These assurances are spelled
out in 42 CFR § 441.302 and included in this part of the waiver application. By submitting the
waiver application, the state attests that it will abide by these assurances during the period that
the waiver is in effect. These assurances may not be altered.
Other components of the application address how the waiver is designed to meet these
assurances. For example, Appendix B details how the state will meet the evaluation of need
assurance. In addition, the quality improvement strategy contained throughout the application
and in Appendix H describes how the state will monitor performance in meeting the assurances
on a continuing basis during the period that the waiver is in effect.
6. Additional Requirements
Overview
This section includes additional requirements that apply to the operation of HCBS waivers over
and above the assurances contained in 42 CFR § 441.302. States are reminded that waivers must
comply with all applicable Medicaid requirements, including requirements that are not listed in
this part of the application. Item 6-I (public input) is the only item in this part that requires a
state response. The basis of these requirements is discussed below.
Discussion of Additional Requirements
Item 6-A: Service Plan
The services that an individual will receive through the waiver must be spelled out in advance in
a written service plan. In the revised application, the terminology “participant-centered service
plan” or “service plan” is synonymous with “plan of care.” This item spells out federal
requirements that pertain to the service plan. Appendix D describes the process that is employed
in the waiver to develop the service plan. Service plan development is a critical waiver function.
The service plan spells out how the assessed needs of each waiver participant will be met.
The requirements related to the service plan as described under 42 CFR § 441.302(c)(2) are as
follows:
•

Waiver services must be furnished in accordance with the service plan. Whenever the
services that are furnished to a participant change, the service plan must be revised. A state
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may provide for processes to authorize the provision of waiver services on an emergency
basis, provided that the service plan is revised to reflect the additional services.
•

The service plan must be inclusive of all the services and supports that are furnished to
meet the assessed needs of a participant, including services that are funded from sources
other than the waiver (e.g., services that are obtained through the state Medicaid plan, from
other public programs and/or through the provision of informal supports). In other words,
the service plan should provide a complete picture of how participant needs are met. It is
recognized that the waiver operating agency and the state have direct responsibility only for
the delivery of waiver services. With respect to other public services and informal
supports, responsibilities include linkage, referral and advocacy and monitoring access to
and receipt of other services as part of service plan implementation (as described in
Appendix D-2).

•

With respect to waiver services, the service plan must include the specific waiver services
that will be furnished to a participant, their amount, duration and frequency (e.g., daily or
weekly), and the type of provider that will furnish each service. The service plan need not
name the specific provider that will furnish each service, only the type of provider (e.g.,
home health agency or personal assistant).

•

Federal financial participation (FFP) may not be claimed for waiver services that are
furnished prior to the development of the service plan or for waiver services that are not
included in an individual’s service plan. A service plan may not be backdated.

•

The service plan must be subject to the approval of the Medicaid agency. Appendix D-1
describes how this is accomplished. This requirement does not necessarily mean that the
Medicaid agency must review and approve each and every service plan, either before it
goes into effect or on a retrospective basis. Often, this requirement is met by the Medicaid
agency’s retrospectively reviewing a sample of service plans.

Item 6-B: Individuals Who Are Inpatients
CMS regulations at 42 CFR § 441.301(b)(1)(ii) provides that waiver services may not be
furnished to individuals who are in-patients of a hospital, nursing facility or ICF/IID. FFP is not
available for waiver services while the person is in a hospital, nursing facility or ICF/IID except
for temporary short-term respite services delivered in an institution, and personal assistance
retainer payments, as described in CMS State Medicaid Director letter Olmstead Update #3
(located in Attachment C). So that waiver participants may continue to receive services in the
most integrated setting appropriate to their needs, CMS permits the continued payment to
personal assistants under the waiver while a person is hospitalized or absent from his or her
home. If a state chooses to make such payments, it must clearly indicate this in the service
specifications in Appendix C-3 for the personal assistance service where retainer payments will
be made.
States that elect to make personal assistance retainer payments must also specify the limits that
will be applied to this service. The personal assistance retainer time limit may not exceed the
lesser of 30 consecutive days or the number of days for which the state authorizes a similar
payment in nursing facilities.

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The institutionalization of a waiver participant does not dictate that the person must be
terminated from the waiver. A state may provide for the continuation of the person on the
waiver by reserving or holding a waiver opening for the person.
Under certain circumstances, a state may arrange for the provision of some services (e.g., home
modifications) in advance of the transition of institutionalized persons to the community in order
to ensure the continuity of care for these individuals. These circumstances and the types of
services that may be arranged in advance of transition to the community are discussed in more
detail in the instructions for Appendix C.
Item 6-C: Room and Board
FFP may not be claimed for the cost of room and board except in certain circumstances. CMS
interprets the term “room” to mean shelter type expenses, including all property-related costs
such as rental or purchase of real estate and furnishings, maintenance, utilities, and related
administrative services. Per 42 CFR § 441.310, the term “board” means three meals a day or any
other full nutritional regimen.
As provided in 42 CFR § 441.310(a)(2), room and board may be claimed for temporary shortterm respite services that are furnished in settings that are not the participant’s own private
residences and a state may elect to pay the portion of the rent and food that can be attributed to a
live-in caregiver who furnishes services to a participant in the participant’s private residence. In
Appendix I, a state describes how it excludes the cost of room and board from its claim for
federal financial participation in the costs of waiver services. When a state elects to pay for the
portion of rent and food that can be attributed to a live-in caregiver, it includes “live-in
caregiver” as a covered waiver service in Appendix C and describes how it determines the
amount that is paid for the rent and food that is attributable to the live-in caregiver in Appendix I.
A state may claim FFP for the costs of meals that are furnished as part of a program of adult day
health or a similar activity conducted outside the participant’s living arrangement on a partial day
basis. A waiver may also cover “meals on wheels” (or similar) services that provides up to two
meals each day and which do not constitute a full nutritional regimen to waiver participants who
live in their own private residence.
Item 6-D: Access to Services
Any service that is offered in a waiver must be available to every waiver participant who requires
the service as provided in the specifications for each service in Appendix C-3. In Appendix C-3,
a state may establish limits on the amount, duration and scope of each service. However, as
provided in CMS State Medicaid Director letter #01-006 Olmstead Update #4 (located in
Attachment C), a state may not limit the number of waiver participants who may receive a
particular waiver service, nor may a state deny a needed waiver service due to the lack of funds.
In addition, a state may not limit a group of waiver participants to receiving a pre-defined
package of waiver benefits by preventing members of the group from accessing other services
offered under the waiver. This means that a state may not operate what amounts to a “waiver
within a waiver.” In short, waiver services must be available on a comparable basis to all waiver
participants who have been assessed as needing the services. When a state wishes to offer
different benefits to specific groups of individuals, it should apply to operate distinct waivers for
each group.

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Item 6-E: Free Choice of Provider
HCBS waivers must comply with section1902(a)(23) of the Act and 42 CFR § 431.51, which
require that Medicaid beneficiaries must be allowed to obtain services from any willing and
qualified provider of a service. A willing provider is a provider who agrees to accept a state’s
payment as payment in full for rendering a service and to abide by all other Medicaid provider
requirements, including executing a provider agreement. A qualified waiver provider means an
individual or entity that meets the qualifications that are specified in Appendix C-3 for the
service that the provider renders. All qualified providers must be permitted to participate in the
waiver program and have a provider agreement with the Medicaid agency if they chose to do so
unless a state has secured a waiver of section1902(a)(23) to place restrictions on providers (e.g.,
by requesting a waiver under the section 1915(b)(4) authority).
Item 6-F: FFP Limitation
In accordance with 42 CFR § 433 Subpart D, FFP may not be claimed for services when another
third party (e.g., other third-party health insurer or other federal or state program) is legally liable
and responsible for the provision and payment of the service. This requirement applies to all
Medicaid services, including waiver services. The Medicaid program functions as the payer of
last resort.
Item 6-G: Fair Hearing
Waiver participants (like other Medicaid beneficiaries) must have the opportunity to request a
Fair Hearing, pursuant to 42 CFR §§ 431.220-221, to seek a reconsideration of certain types of
decisions that affect their eligibility or their services. How this opportunity is provided is
described in Appendix F.
Item 6-H: Quality Improvement
This item establishes the expectation that a state have an on-going, continuous system to ensure
that the waiver assurances and other requirements are met when the waiver is in effect (see 42
CFR §§ 441.301-302). This system is described in the quality improvement strategy contained
throughout the appendices in the document, in Appendix H and in other elements of the
application (e.g., Appendix G: Participant Safeguards).
Item 6-I: Public Input
Instructions
In the text field, describe how public input into the development of the new waiver, waiver
renewal, or waiver amendment was secured.
Technical Guidance
CMS requires states to obtain public input during the development of a waiver (or a waiver
renewal or a waiver amendment with substantive changes) in accordance with 42 CFR §
441.304(f). The public input process must be described fully and be sufficient in light of the
scope of the changes proposed, to ensure meaningful opportunities for input for individuals
served or eligible to be served in the waiver. For the public input process to be sufficient in light
of the scope of the changes proposed, the state is expected to share with the public the entire
waiver. In addition, the state’s public input process should have included at least two (2)
statements of public notice and public input procedures, with at least one being web-based AND
at least one being non-electronic to ensure that individuals without computer access have the
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opportunity to provide input. This state must provide at least a 30-day public notice and
comment period and be completed prior to submission of the proposed change to CMS. The
state’s response to this item in the waiver application should include a summary of the public
comments received during the public input process, and if any comments were not adopted, the
reasons why. The state should also specify in their summary any modifications to the waiver that
they made as a result of the public input process.
CMS Review Criteria
For new waivers, and renewals and amendments with substantive changes:
•
•
•
•
•
•

Did the state fully describe the public input process?
Was the public input process at least a 30-day period, and was it completed prior to the
waiver submission to CMS?
Did the state provide at least two (2) statements of public notice and public input
procedures? Was one of them web-based?
Did the state include a summary of the public comments that the state received during the
public input process, reasons why any comments were not adopted, and any modifications
to the waiver that they made as a result of the public input process?
Did the state’s posting include the entire waiver? For new waivers, was the public input
process sufficient?
For renewals and amendments with substantive changes, was the public input process
sufficient in light of the scope of the proposed changes in the waiver submission?

Item 6-J: Notice to Tribal Governments
Instructions
In the text field, describe how federally recognized tribes were consulted.
Technical Guidance
Section 1902(a)(73) of the Act requires states to seek advice from all Indian health providers and
urban Indian organizations in the state prior to submitting state plan amendments or waiver
requests that may have a direct impact on Indians or Indian health providers. States that have
these providers have submitted a SPA outlining the process for seeking advice that they state will
follow prior to submitting SPAs or waiver requests, renewals, amendments or extensions. In
some cases, the aforementioned SPAs outlined a process for consultation with tribal
governments as well as seeking advice from Indian health and Urban Indian organizations. In
addition to the requirement to seek advice from Indian health providers and urban Indian
organizations, States must consult with federally recognized Indian Tribes that maintain a
primary office and/or majority population within the state of intent to submit a Medicaid waiver
request, including a request for a waiver renewal. If a state has outlined the process for
consulting with tribal governments in the aforementioned SPA, that process should be followed.
If they have not included tribal consultation in the SPA, the notice to tribal governments must be
sent at least 60-days in advance of submitting the request, allowing the tribe(s) at least 30 days to
respond. Please see State Medicaid Director Letter #01-024 (July 17, 2001), Attachment C, for
more information about meeting this requirement. Evidence documenting the process for
seeking advice from Indian health providers and urban Indian organizations, as well as
documentation that the state fulfilled the tribal government consultation process must be readily
available through the state Medicaid agency.
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Item 6-K: Limited English Proficient Persons
As in the case of other Medicaid services, a state must provide meaningful access to a waiver by
Limited English Proficient persons as described in 42 CFR § 435.905(b). How this access is
provided with respect to the waiver is described in Appendix B-8 of the waiver application.
7. Contact Person(s)
Item 7-A: State Medicaid Agency Representative
Instructions
Provide the name and other contact information of the individual at the Medicaid agency with
whom CMS should communicate regarding the waiver.
Technical Guidance
The individual identified should be familiar with the waiver and be able to respond to CMS
questions concerning the application. A Medicaid agency contact must be identified even though
the waiver is operated by another agency. CMS directs its communications regarding a waiver
request to the Medicaid agency. The information provided here also is entered into a CMS
database that is used to distribute information to states regarding waivers.
Item 7-B: Operating Agency Representative
Instructions
When a waiver is operated by a state agency that is not part of the Medicaid agency (as provided
in Appendix A of the application), provide the name and other contact information of an
individual at the operating agency who should be included in CMS communications concerning
the waiver.
Technical Guidance
While the first line of communication between CMS and a state regarding a waiver application is
the through Medicaid agency, CMS recognizes that many waivers are developed and operated by
other state agencies in collaboration with the Medicaid agency. Consequently, it is important for
the Medicaid agency to also directly involve operating agency representatives in discussions
concerning the waiver application.
8. Authorizing Signature
Instructions
When the web-based application is used, the application is signed electronically when the State
Medicaid Director or designee submits the application using the submission feature that is
reserved only for the use of the Director.
Technical Guidance
All new waiver and waiver renewal applications (as well as amendments) must be submitted to
CMS by the Medicaid agency in accordance with 42 CFR § 430.25(e). Therefore, the State
Medicaid Director or designee in the Medicaid agency must sign the application.
The State Medicaid Director’s signature certifies that the state will abide by all the provisions of
the waiver application and that the waiver will be operated to continuously meet the assurances
and other requirements that are spelled out in the application.

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CMS Review Criteria
The waiver application has been signed by the State Medicaid Director or designee.
Attachments (if applicable)
Attachment #1: Changes from Previous Approved Waiver That May Require a Transition
Plan (if applicable)
Instructions: If applicable, check the box next to any of the following changes from the current
approved waiver that you are making with this application. Check all of the boxes that apply. If
you check any of the boxes, you will be prompted to complete a transition plan.
□ Replacing an approved waiver with this waiver.
□ Combining waivers.
□ Splitting one waiver into two waivers.
□ Eliminating a service.
□ Adding or decreasing an individual cost limit pertaining to eligibility
□ Adding or decreasing limits to a service or a set of services, as specified in Appendix C
□ Reducing the unduplicated count of participants (Factor C).
□ Adding new, or decreasing, a limitation on the number of participants served at any point
in time.
□ Making any changes that could result in some participants losing eligibility or being
transferred to another waiver under 1915(c) or another Medicaid authority.
□ Making any changes that could result in reduced services to participants.
Technical Guidance
Instructions
When applicable, submit the transition plan for the waiver as Attachment #1.
Technical Guidance
A transition plan should accompany a waiver application whenever individuals who participate
in an approved waiver might be adversely affected when a new replacement waiver takes effect,
or a renewal or amendment includes certain types of changes in the approved waiver. A
transition plan should accompany the waiver application or amendment in the following
circumstances:
•
•
•
•

A new waiver replaces an approved waiver;
The waiver renewal or amendment would eliminate or limit any of the services that are
furnished under the approved waiver;
The waiver renewal or amendment would result in some participants who are served in
the approved waiver losing eligibility or necessitate the transfer of some participants to
another waiver;
The waiver renewal or amendment includes major changes that would affect the amount
of services that are furnished to waiver participants under the approved waiver (e.g., the
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•
•

renewal or amendment includes an individual cost limit that is new/lower than the
approved waiver or the renewed waiver would impose limits on the overall dollar amount
of services that may be authorized in participant service plans;
Two waivers are being combined; or
A waiver is being split into two separate waivers.

As applicable, the transition plan should address the following topics:
•
•
•
•
•

•

Similarities and differences between the services covered in the approved waiver and
those that will be covered in the new waiver or the renewed/amended waiver;
When some services in the approved waiver will not be available through the new or
renewed/amended waiver or will be available in lesser amounts, describe how the health
and welfare of persons who receive the services that are terminated will be assured;
When the new or renewed/amended waiver includes limitations on the amount of waiver
services that were not included in the approved waiver, how the limitations will be
implemented;
Whether individuals served in the approved waiver also will be eligible to participate in
the new or renewed/amended waiver;
If some persons served in the approved waiver will not be eligible to participate in the
new or renewed/amended waiver, describe the steps that the state will take to facilitate
the transition of affected individuals to alternate services and supports. Such alternatives
may include their timely transition to another HCBS waiver for which they may qualify
and assisting them to access other services (including services under the state plan) that
may meet their needs;
The timetable for transitioning individuals to the new waiver (i.e., will participants in the
existing waiver transition to the new waiver at the same time or will the transition be
phased in (e.g., individuals will transition when their service plan is reviewed or when
their level of care is re-evaluated)?); and
How and when participants will be notified of the changes.

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CMS Review Criteria
The transition plan:
•
•
•
•
•

•
•

Describes the similarities and differences between the services covered in the approved
waiver and those covered in the new or renewed/amended waiver.
When services in the approved waiver will not be offered in the new or renewed/amended
waiver or will be offered in lesser amount, describes how the health and welfare of persons
who receive services through the approved waiver will be assured.
Addresses whether persons served in the existing waiver also are eligible to participate in
the new waiver.
When the new or renewed/amended waiver includes limitations on the amount of waiver
services that were not included in the approved waiver, the plan describes how the
limitations will be implemented.
When persons served in the approved waiver will not be eligible to participate in the new
or renewed/amended waiver, the plan describes the steps that the state will take to
facilitate the transition of affected individuals to alternate services and supports that will
enable the individual to remain in the community.
Includes the timetable for transitioning individuals to the new waiver (i.e., will
participants in the existing waiver transition to the new waiver all at the same time or will
the transition be phased in?).
Describes how the participant is notified of the changes and informed of the opportunity
to request a Fair Hearing.

Appendix A: Waiver Administration and
Operation
Brief Overview
This appendix identifies the state agency that is responsible for the day-to-day waiver
administration and operation, other contracted entities that perform waiver operational functions,
and, if applicable, local/regional entities that have waiver administrative responsibilities. The
Appendix also provides for indicating how specific waiver operational functions and activities
are distributed among state, local/regional and other entities and how the state Medicaid agency
monitors performance of those functions.
Requirements: Waiver Administration and Operation
The administration and operation of waivers frequently involves the collaboration of the
Medicaid agency and other state agencies. In addition, the operation of waivers is often
decentralized, and local agencies play important roles in facilitating the access of individuals to
the waiver, including performing waiver operational functions. CMS recognizes that it may be
efficient and effective for a state to locate the operation of a waiver with an agency other than the
Medicaid agency and link the delivery of waiver services to other federal, state and local
programs. Appendix A describes the administrative structure under which the waiver is
operated. When waiver administrative and operational functions are performed by other entities
on behalf of the Medicaid agency, certain requirements must be met.
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In accordance with 42 CFR § 431.10, the Medicaid agency is responsible for ensuring that a
waiver is operated in accordance with applicable federal regulations and the provisions of the
waiver itself. The Medicaid agency may not delegate its authority over a waiver to another
entity. When the Medicaid agency delegates to another agency, provided that the other state
agency and the Medicaid agency enter into an agreement that specifies the waiver administrative
and operational activities and functions that the other agency performs as delegated and under
the supervision of the Medicaid agency. In the application, when a waiver is operated by another
state agency, the sister agency is referred to as the “operating agency.”
The state Medicaid agency may be an umbrella agency with numerous divisions, units or
administrations within its domain. When a division, unit or administration within the umbrella
state Medicaid agency conducts waiver administrative activities, the state must describe the
methods enlisted by the State Medicaid Director to provide oversight and guidance related to
those activities. These mechanisms may include performance plans of direct reports, internal
delegation documents or other formal mechanisms that impart delegated functions from the State
Medicaid Director to a division within the broader Medicaid agency.
The requirement that the Medicaid agency maintain its authority over the waiver means that any
rules, regulations and policies that govern how the waiver is operated should be issued by the
Medicaid agency rather than by the operating agency. In issuing rules, regulations and policies
that affect the waiver, the Medicaid agency may incorporate by reference rules, regulations and
policies that have been adopted by the operating agency (or another state agency – e.g., rules and
regulations concerning provider qualifications). In short, the operating agency may not
independently promulgate rules, regulations and policies that have a material effect on the
provision of waiver services and how waiver processes are conducted. Policies and other types
of guidance concerning waiver operations may be issued jointly by the Medicaid agency and the
operating agency. Alternatively, the Medicaid agency may formally approve policies and
guidance developed and issued by the operating agency.
A state also may arrange for the performance of some of the waiver operational and
administrative functions by contracted entities. For example, the Medicaid agency or the
operating agency (if applicable) may enter into a contract with a private entity to conduct quality
improvement functions (e.g., conduct periodic surveys of waiver participants) that are necessary
for the proper and efficient administration of the waiver. Such contractual arrangements are
subject to the provisions of 42 CFR Part 434 (contracts) or such other federal regulations as may
apply.
Finally, a state also may provide that local/regional non-state entities perform waiver operational
and administrative functions in order to link the provision of waiver services with other federal,
state and local programs that are operated by such entities. Such entities may include public
county human services agencies or other types of local human services agencies (e.g., Area
Agencies on Aging – AAAs). For example, a state may provide that entrance to a waiver that
serves older persons takes place through the state’s AAA network in order to link the provision
of waiver services to Older Americans Act programs and services. When local/regional nonstate entities perform waiver operational and administrative function, there must be contracts or
agreements in place that authorize the performance of such functions by local/regional non-state
entities, and the state must monitor performance of those functions.
CMS regulations at 42 CFR § 431.10(e) specifies that the Medicaid agency must retain the
authority to exercise administrative discretion and issue policies, rules and regulations. If other
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state or local agencies or contractors perform waiver administrative and operational functions for
the Medicaid agency, such entities must not have the authority to change or disapprove any
administrative decision of the Medicaid agency or otherwise substitute their judgment for that of
the Medicaid agency with respect to the application of policies, rules, and regulations issued by
the Medicaid agency. Provider agreements must be executed between the Medicaid agency and
the providers. Note: Medicaid waiver eligibility determinations can only be performed by the
State Medicaid Agency (SMA) or a government agency delegated by the SMA in accordance
with 42 CFR § 431.10. Thus, eligibility determinations for the group described in 42 CFR §
435.217 (which includes a level-of-care assessment, because meeting a 1915(c) level of care is a
factor of determining Medicaid eligibility for the group) must comply with 42 CFR § 431.10.
Non-governmental entities can support administrative functions of the eligibility determination
process that do not require discretion including, for example, data entry functions, IT support,
and implementation of a standardized level-of-care assessment tool. States should ensure that
any use of an assessment tool by a non-governmental entity to evaluate/determine an individual’s
required level-of-care involves no discretion by the non-governmental entity and that the
development of the requirements, rules, and policies operationalized by the tool are overseen by
the state agency.
With respect to HCBS waivers, a state must provide for the consistent, uniform administration
and operation of the waiver across all geographic areas where the waiver is in operation. For
example, when local/regional non-state agencies perform waiver administrative and operational
functions, the state must ensure that consistent decisions are made about the authorization of
waiver services wherever a waiver participant may reside. As previously noted in the
instructions for the Application/Module 1, if the state wishes to provide different services or
utilize different approaches to service delivery in different parts of the state, the state should
consider applying to operate separate waivers in each area of the state. Absent a waiver of
statewideness, it is expected that the waiver will be administered and operated in a consistent
fashion in all parts of the state and, thereby, ensure that waiver services are provided on a
comparable basis to the entire target group of waiver participants in compliance with 42 CFR §
440.240(b) (comparability of services for groups).
When waiver administrative and operational functions are performed by other entities on behalf
of the Medicaid agency, the Medicaid agency should have a formal, written document expressly
delegating the functions to be performed, and the Medicaid agency must supervise the
performance of these functions. Supervision does not mean that the Medicaid agency must
review and approve each and every action taken by another entity. It is expected that the
Medicaid agency will conduct or arrange for the periodic assessment of the performance of other
entities in conducting waiver administrative and operational activities to ensure that the waiver is
operated in accordance with the approved waiver and applicable federal requirements. In its
quality improvement strategy for the waiver, the state describes how it will assure that the
“Medicaid agency retains ultimate authority and responsibility for the operation of the waiver by
exercising oversight over the performance of waiver functions by other state and local agencies
(if applicable) and contracted entities.”

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Detailed Instructions for Completing Appendix A
Item A-1: State Line of Authority for Waiver Operation
Instructions
Select whether the waiver is operated by the Medicaid agency or by another state agency. When
the waiver is operated by the Medicaid agency, specify whether it is operated by the Medical
Assistance Unit or another division/unit within the Medicaid agency. When the waiver is
operated by another state agency, specify the state agency and complete Item A-2.
Technical Guidance
This item identifies the state agency that has day-by-day administrative and operational
responsibility for the waiver. The waiver may be operated by the Medicaid agency or another
state agency under an agreement with the Medicaid agency. The Medicaid agency is the single
state agency designated in accordance with 42 CFR § 431.10(b)(1) to administer or supervise the
state plan. The medical assistance unit is the unit within the Medicaid agency that is established
pursuant to 42 CFR § 431.11(b) and in some states is synonymous with the Medicaid agency. In
some states, the Medicaid agency is a state department/agency rather than a division/unit within
a state department/agency. When this is the case, the state Medicaid agency may delegate the
operation of the waiver to another division/unit within the umbrella Medicaid agency or assign
this responsibility to its Medical Assistance Unit. When a division/unit other than the Medical
Assistance Unit is responsible for operating the waiver, the waiver is considered to be operated
by the Medicaid Agency.
In responding to this item, specify whether the waiver is operated by the Medical Assistance Unit
or another Medicaid agency division/unit. The state Medicaid agency may be an umbrella agency
with numerous divisions, units or administrations within its domain. When a division, unit or
administration within the umbrella state Medicaid agency conducts waiver administrative
activities, the state must describe the methods enlisted by the State Medicaid Director to provide
oversight and guidance related to those activities. These mechanisms for oversight may include
performance plans of direct reports, internal delegation documents or other formal mechanisms
that impart delegated functions from the State Medicaid Director to a division within the broader
Medicaid agency. If the waiver is operated by a division, unit, or administration within the
Medicaid agency that differs from the Medical Assistance Unit, complete Item A-2-a.
Alternatively, a waiver may be operated by another state agency that is not the Medicaid agency.
This practice is relatively common. States frequently locate waiver operational responsibility
with a state agency that has programmatic and other responsibilities for the full range of services
(including services funded by state and/or federal funds other than Medicaid) that are furnished
to a target population (e.g., older persons). The other state agency may be located in the same
department as the Medicaid agency but is not organizationally a part of the Medicaid agency or
located in a different state department.
When the waiver is not operated by a division/unit of the Medicaid agency, in accordance with
42 CFR § 431.10(d), there must be a formal, written agreement between the Medicaid agency
and the operating agency that explicitly spells out the waiver activities and functions that the
operating agency performs on behalf of the Medicaid agency. This agreement may take the form
of an interagency agreement or a memorandum of understanding. Do not submit the agreement
as part of the waiver application. If CMS needs to examine the agreement, it will request a copy
from the Medicaid agency.
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There are no established specifications for these agreements. An agreement, however, must be
sufficiently detailed so that it clearly delineates those activities, functions and responsibilities
that the Medicaid agency delegates to the operating agency and the responsibilities of the
operating agency in carrying out those functions. The agreement need not be confined solely to
the operation of the waiver (e.g., it may address additional topics as well) and an agreement may
span the operation of more than one waiver so long as operating agency responsibilities for each
waiver are clearly delineated. However, the agreement may not undermine the ultimate authority
and responsibility of the Medicaid agency for the operation of the waiver, including meeting the
waiver assurances. The agreement also may serve as the basis for claiming administrative FFP
for the proper and necessary costs that are incurred by the operating agency in administering the
waiver. Medicaid administrative claiming, necessary for the efficient administration of the
Medicaid state plan, must be in accordance with the state’s CMS-approved Medicaid cost
allocation plan. Please note that approval of this waiver application does not constitute approval
of the state’s Medicaid cost allocation plan.
Item A-2: Medicaid Agency Oversight of Waiver Administration
Item A-2-a: Operation by a Division/Unit within the SMA other than the Medical
Assistance Unit.
Instructions
This item is only completed when a division/unit (or administration) within the umbrella state
Medicaid agency, other than the Medical Assistance Unit operates the waver. In the text field,
specify the methods employed by the State Medicaid Director (in some instances, the individual
is also the head of the umbrella state agency) to provide oversight and guidance related to those
activities. These mechanisms for oversight may include performance plans of direct reports,
internal delegation documents or other formal mechanisms that impart delegated functions from
the State Medicaid Director to a division within the broader Medicaid agency.
When the waiver is operated by another division/unit/administration within the umbrella Agency
designated as the single state Medicaid agency. Specify (a) the functions performed by that
division/administration (i.e., the Developmental Disabilities Administration within the single
state Medicaid agency), (b) the name and most recent execution date of the document utilized to
outline the roles and responsibilities related to waiver operation, and (c) the methods that are
employed by the designated State Medicaid Director in the oversight of these activities.
Technical Guidance
As noted above, when the waiver is operated by a division/unit/administration of the Medicaid
agency that is outside of the Medical Assistance Unit or the division responsible for Medicaid
administration, the state must ensure that this division is performing its assigned waiver
operational tasks and administrative functions in accordance with waiver requirements. States
(and State Medicaid Directors) have discretion to establish these mechanisms, which will vary
depending on the umbrella state Medicaid agency (SMA) structure and internal reporting
systems. When the waiver is administered by an entity within the SMA other than the Medical
Assistance Unit, it is considered for the purpose of this application to be operated by the SMA.
However, there should be a clear line of reporting between the Medical Assistance Unit and the
operating entity within the SMA, and the Medical Assistance Unit must oversee the operations of
the entity in administering the waiver to ensure compliance with federal requirements.

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Item A-2-b: Operation by a non-SMA State Entity
Instructions
This item is only completed when a state entity that is NOT the state Medicaid agency operates
the waiver. In the text field, specify the methods that the Medicaid agency uses to ensure that the
operating agency performs its assigned waiver operational and administrative functions in
accordance with waiver requirements. Also, specify the frequency of Medicaid agency
assessment of operating agency performance.
Technical Guidance
As noted above, when a waiver is not operated by the Medicaid agency, the Medicaid agency
must ensure that the operating agency performs its assigned waiver operational and
administrative functions in accordance with waiver requirements. States have discretion in
determining Medicaid agency oversight methods. The methods employed will hinge on the
specific scope and nature of the functions and activities that the operating agency performs.
These will include the functions and activities indicated in Item A-3 (see next section) and others
specified elsewhere in the application. It is important to keep in mind that Medicaid agency
oversight need not take the form of the Medicaid agency reviewing and approving each operating
agency action (e.g., reviewing all the service plans that the operating agency already has
reviewed) or the redundant performance of functions and activities that are carried out by the
operating agency (e.g., replicating look-behind type reviews of case manager performance when
the operating agency already conducts such reviews). Medicaid agency oversight may be
exercised in a variety of ways, including providing that the operating agency track and
periodically report to the Medicaid agency its performance in conducting operational functions
(e.g., reporting how promptly service plans are developed and implemented once a participant
has entered the waiver).
It is important to emphasize that the state Medicaid agency and the operating agency should
work together to ensure that the waiver is operated in accordance with Medicaid rules, and that
the services delivered are appropriate for the populations served. The knowledge of Medicaid
requirements and the requisite program knowledge often contained within the operating agency
represent the need for a strong collaborative relationship in the operation of the waiver. The
Medicaid agency retains ultimate authority and control over the waiver, but in order to effectuate
a strong, Medicaid compliant service delivery mechanism, the state should establish clear and
strong lines of communication between the operating agency and the state Medicaid agency.
As noted previously, the state’s quality improvement strategy describes how the state assures that
the Medicaid agency maintains its authority over the waiver. Oversight of operating agency
performance is an element of this assurance. As applicable, the oversight methods described
here are to be cited in the QIS section related to the Administrative Authority of the state
Medicaid agency.
When the waiver is not operated by the Medicaid agency, the state must specify the functions
that are expressly delegated through a memorandum of understanding (MOU) or other written
documents that and should indicate the frequency of review and update for the document. Please
note the MOU or agreement must be in place prior to the implementation of the waiver. In
addition, The MOU or agreement must reflect roles and responsibilities of the waiver as it is
currently being operated.

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CMS Review Criteria
• The Medicaid agency’s oversight methods span the full range of operational and
administrative responsibilities of the division/unit/administration within the Medicaid
agency and the operating agency including its oversight of contracted and local/regional
entities’ functions as specified in Item A-3 and elsewhere in the application.
• The frequency of oversight is specified.
Waiver Operational and Administrative Functions
Items A-3 and A-4 address whether contracted entities and/or local/regional non-state entities
perform waiver operational and administrative functions. Item A-7 lists specific functions that
such entities might perform. The response to Items A-3 and A-4 hinges on whether contracted
entities or local/regional non-state entities perform one or more of the functions listed in Item A7. Please note that the Financial Management Service (FMS) may be provided as a Medicaid
administrative activity or as a waiver service. When provided as an administrative activity, FMS
serves as an example of an entity that could perform a function listed in A-3.
The list in Item A-7 is not inclusive of all waiver operational and administrative functions. The
list generally does not include functions that are addressed elsewhere in the application (e.g., the
performance of case management activities such as monitoring service plan implementation
(addressed in Appendix D-2).
The operational and administrative functions listed in Item A-7 are defined as follows:
•
•

•

Participant waiver enrollment. This function includes performing waiver intake
activities, including taking applications to enter the waiver and referring, when necessary,
individuals for the determination of Medicaid eligibility and/or disability.
Waiver enrollment managed against approved limits. This function includes ensuring
that the waiver’s participant limit (as provided in Appendix B-3) is not exceeded and
managing entrance to the waiver by applying the state’s policies concerning the selection
of individuals to enter the waiver (as also provided in Appendix B-3). The function also
might include establishing and maintaining a waiting list for entrance to waiver, if
necessary. When waiver capacity is allocated by locality or region, local/regional nonstate agencies may also be involved in managing enrollment.
Waiver expenditures managed against approved levels. This function includes
monitoring waiver expenditures to assure that the waiver is cost neutral and operates
within the estimates in the approved waiver (and, as necessary, preparing waiver
amendments to modify cost estimates). Usually, this function is performed by a state
agency.
Level of care evaluation. Such activities may include compiling the information that is
necessary to evaluate potential entrants to the waiver and the continuing need for the
level of care that the waiver provides for waiver participants. It may also include the
review of such information by the state or a contracted entity in order to determine that an
individual meets level of care criteria. Note: If the LOC evaluation results in Title XIX
eligibility, the final decision must be a Medicaid agency decision since only the Medicaid
Agency can make an eligibility decision. Medicaid eligibility determinations can only be
performed by the State Medicaid Agency (SMA) or a government agency delegated by
the SMA in accordance with 42 CFR § 431.10. Thus, eligibility determinations for the
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•

•
•

group described in 42 CFR § 435.217 (which includes a level-of-care assessment,
because meeting a 1915(c) level of care is a factor of determining Medicaid eligibility for
the group) must comply with 42 CFR § 431.10. Non-governmental entities can support
administrative functions of the eligibility determination process that do not require
discretion including, for example, data entry functions, IT support, and implementation of
a standardized level-of-care assessment tool. States should ensure that any use of an
assessment tool by a non-governmental entity to evaluate/determine an individual’s
required level-of-care involves no discretion by the non-governmental entity and that the
development of the requirements, rules, and policies operationalized by the tool are
overseen by the state agency.
Review of participant service plans. This activity may include local/regional entity
review of service plans or, if required by the state, the review and approval of service
plans by the Medicaid agency or the operating agency (if applicable). The focus is on
activities that take place once a service plan has been developed but prior to its
implementation. The function does not include the retrospective review of service plans
that might be conducted by the Medicaid agency in order to (a) meet the requirement that
service plans are subject to the approval of the Medicaid agency (as provided in
Appendix D-1) or (b) determine retrospectively whether service plans appropriately
address the needs of waiver participants, a quality improvement activity that is addressed
in the state’s QIS.
Prior authorization of waiver services. This function refers to the review of the
necessity of specific waiver services before they are authorized or delivered. It does not
refer to review of the overall service plan. For example, a waiver might provide for the
provision of crisis stabilization services under certain circumstances but require that the
provision of such services be reviewed prior to their authorization. Alternatively, a
waiver might provide that additional services may be authorized over and above the limit
on the dollar amount established in Appendix C-4 of the waiver but require prior
authorization for such services.
Utilization management. Utilization management includes processes to ensure that
waiver services have been authorized in conformance to waiver requirements and
monitoring service utilization to ensure that the amount of services is within the levels
authorized in the service plan or that services utilized have been authorized in the service
plan. It also may include identifying instances when individuals are not receiving
services authorized in the service plan or the amount of services utilized is substantially
less than the amount authorized to identify potential problems in service access.
Qualified Provider enrollment. Qualified provider enrollment refers to the performance
of standard provider enrollment processes conducted by the state Medicaid Agency, as
well as any delegated functions related to the recruitment and enrollment of providers.
Execution of Medicaid provider agreements. Section 1902(a)(27) of the Act and 42
CFR § 107 require that there be an agreement between the Medicaid agency and each
provider that furnishes services under the waiver. In some instances (e.g., when a state
contracts with an Organized Health Care Delivery System (OHCDS) to furnish waiver
services), the provider agreement is executed with an organization that contracts with
other providers to furnish waiver services, but these providers do not have an agreement
with the Medicaid agency. Except in these cases (which are discussed where applicable
elsewhere in the instructions), there must be a provider agreement between the Medicaid
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agency and each waiver provider. Such agreements may be multi-party agreements (e.g.,
the agreement may be made by the Medicaid agency, the operating agency and the
provider).
The Medicaid agency may assign to another entity (e.g., the operating agency, a county
agency, or a financial management services entity that supports waiver participants to
direct their own services) the responsibility to execute (sign) the provider agreement on
behalf of the Medicaid agency. If the Medicaid agency chooses to assign this
administrative function to another entity, the Medicaid agency must assign this
responsibility in writing to the entity. For example, if counties are authorized to execute
the state’s provider agreement on behalf of the Medicaid agency, the authorization may
be included in the agreement between a county and the Medicaid agency to perform
waiver operational and administrative functions. However, the Medicaid agency cannot
delegate its statutory responsibilities for oversight and standard setting. In carrying out
this administrative responsibility, the entity that executes the provider agreement may not
alter or supplement the provisions of the agreement. If the entity to which this
administrative function is assigned also provides waiver services to participants, it must
execute a provider agreement directly with the Medicaid agency – not itself – for services
that the entity provides.
•

•

Establishment of Statewide Rate Methodology. In accordance with section
1902(a)(30)(A) of the Act, a state must have uniform and consistently applied policies
concerning the determination of waiver payment amounts or rates. This topic is
addressed in more detail in the instructions for Appendix I-2. When this function is
performed by entities other than the Medicaid agency, the entity must follow the state’s
uniform policies.
Rules, policies procedures and information development governing the waiver
program. This function includes the development of any rules, policies and procedures
that govern administration of the waiver. While other entities may be involved in the
development of these items, the state Medicaid agency must retain ultimate approval
authority and they must be consistent in all jurisdictions in which the waiver operates.
This function may also include making information about the waiver available via the
Internet, performing outreach through such organizations as AAAs and consumer support
groups, identifying potential enrollees through the operation of a single-point-of-entry or
“no wrong door” service access point, and providing individuals with information about
the waiver.
Quality assurance and quality improvement activities. This function refers to the
activities related to discovery and remediation activities conducted for the waiver, as well
as the mechanisms for overall systems improvement.

Item A-3: Use of Contracted Entities
Instructions
Based on the listing of waiver operational and administrative functions in Item A-7 (as described
above), indicate whether contracted entities perform one or more of those activities. If so,
identify (in the text field) the types of contracted entities and briefly describe the functions that
they perform. Also, complete Items A-5 and A-6. When contracted entities do not perform any of
the functions listed in Item A-7, select the second choice.
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Technical Guidance
Some waiver operational activities and functions may be performed by entities that are under
contract with the Medicaid agency or the operating agency (if applicable). For the purpose of
this item, contracted entities are third parties that perform functions that are otherwise usually
conducted by the state agency. In the context of this item, contracted entities do not include
waiver providers or local/regional non-state entities (e.g., counties). In the case of the latter,
their role in waiver operations is addressed in items A-4 through A-6 and in item A-7. For
example, the evaluation of level of care can be conducted by a professional review organization
(PRO) under contract to the Medicaid agency. Note: Medicaid eligibility determinations can
only be performed by the State Medicaid Agency (SMA) or a government agency delegated by
the SMA in accordance with 42 CFR § 431.10. Thus, eligibility determinations for the group
described in 42 CFR § 435.217 (which includes a level-of-care assessment, because meeting a
1915(c) level of care is a factor of determining Medicaid eligibility for the group) must comply
with 42 CFR § 431.10. Non-governmental entities can support administrative functions of the
eligibility determination process that do not require discretion including, for example, data entry
functions, IT support, and implementation of a standardized level-of-care assessment tool. States
should ensure that any use of an assessment tool by a non-governmental entity to
evaluate/determine an individual’s required level-of-care involves no discretion by the nongovernmental entity and that the development of the requirements, rules, and policies
operationalized by the tool are overseen by the state agency.
Other examples of administrative activities and functions that might be performed by a
contracted entity include utilization management, prior authorization of selected services, and the
determination of provider rates using the methodology developed by the Medicaid agency. As
applicable, contracted entities may include entities that furnish financial management services
under an administrative contract to waiver participants who direct their services. When using
contracted entities to perform waiver operational activities, the state Medicaid agency should
expressly delegate the performance of these activities in writing and oversee the performance of
these functions.
Since multiple contractors might perform waiver operational and administrative functions,
describe the types of contracted entities that perform these functions (e.g., a PRO, the state’s
Medicaid fiscal agent, a consumer organization). Do not identify by name the specific entity that
performs a function (because if a different contractor is selected to perform a function during the
period that the waiver is in effect, an amendment would have to be submitted to modify this
item). Also, because multiple contractors might be employed, briefly describe the functions that
each type of contractor performs.
Section 1915(c) Waivers that Operate with Concurrent Managed Care. When a section
1915(c) waiver is operated concurrently with a Medicaid managed care authority, managed care
entities may perform several waiver operational and administrative functions in conjunction with
their delivery of services to beneficiaries. For example, such entities determine payment
amounts for providers in their networks and usually have responsibilities concerning enrollment
of individuals. For the purpose of the section 1915(c) waiver application, managed care entities
that perform the waiver operational and administrative functions listed in Item A-7 are
considered to be “contracted entities.” Therefore, identify when managed care entities perform
these functions and briefly list the functions that these entities perform. Specify the types of
entities (e.g., PIHP). Do not list the entities (the specific entities must be identified in the
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Medicaid managed care authority application). As appropriate, include entities other than
managed care entities that may perform section 1915(c) operational and administrative functions
under the provisions of the managed care authority (e.g., an external quality review organization
– EQRO). Note: Medicaid eligibility determinations can only be performed by the State
Medicaid Agency (SMA) or a government agency delegated by the SMA in accordance with 42
CFR § 431.10. Thus, eligibility determinations for the group described in 42 CFR § 435.217
(which includes a level-of-care assessment, because meeting a 1915(c) level of care is a factor of
determining Medicaid eligibility for the group) must comply with 42 CFR § 431.10. Nongovernmental entities can support administrative functions of the eligibility determination
process that do not require discretion including, for example, data entry functions, IT support,
and implementation of a standardized level-of-care assessment tool. States should ensure that
any use of an assessment tool by a non-governmental entity to evaluate/determine an individual’s
required level-of-care involves no discretion by the non-governmental entity and that the
development of the requirements, rules, and policies operationalized by the tool are overseen by
the state agency.
CMS Review Criteria
When waiver operational and administrative activities are performed by contracted entities, the
waiver specifies the types of entities that perform such activities and describes the types of
activities that are performed by each type of entity.

Item A-4: Role of Local/Regional Non-State Entities
Instructions
Select whether public and/or non-governmental local/regional non-state entities perform waiver
operational and administrative functions. If so, specify the nature of these entities. When such
entities perform such functions, complete Items A-5 and A-6.
Technical Guidance
In many states, local/regional non-state entities (e.g., Area Agencies on Aging, county human
services agencies, regional mental health/developmental disabilities authorities) play important
roles in the provision of services and supports for individuals who need long-term services and
supports. These entities often are established under the provisions of state law and have
responsibilities for intake, service coordination and resource development. Some states also
assign some of the waiver operational and administrative responsibilities to these non-state
entities. For the purpose of this item, local/regional non-state entities do not include
local/regional offices of the Medicaid agency or the operating agency (if applicable). Such
offices are considered to be part of their parent state agency.
Before responding to this item, look over the list of activities and functions in item A-7. If
local/regional non-state entities do not perform any of those activities/functions, select the “not
applicable” choice and proceed to item A-7. If local/regional non-state entities perform any of
the listed functions, then complete this item and proceed to items A-5 and A-6. Note: Medicaid
eligibility determinations can only be performed by the State Medicaid Agency (SMA) or a
government agency delegated by the SMA in accordance with 42 CFR § 431.10. Thus, eligibility
determinations for the group described in 42 CFR § 435.217 (which includes a level-of-care
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assessment, because meeting a 1915(c) level of care is a factor of determining Medicaid
eligibility for the group) must comply with 42 CFR § 431.10. Non-governmental entities can
support administrative functions of the eligibility determination process that do not require
discretion including, for example, data entry functions, IT support, and implementation of a
standardized level-of-care assessment tool. States should ensure that any use of an assessment
tool by a non-governmental entity to evaluate/determine an individual’s required level-of-care
involves no discretion by the non-governmental entity and that the development of the
requirements, rules, and policies operationalized by the tool are overseen by the state agency.
The application identifies two types of local/regional non-state entities:
•

•

Public agencies. Public agencies include counties or other governmental entities that are
under the control of local elected officials. When public agencies are assigned waiver
administrative and operational responsibilities, there must be an interagency agreement,
memorandum of understanding or contract in effect that details their responsibilities. The
agreement may be between the Medicaid agency and each entity or may be a three-way
agreement among the Medicaid agency, the operating agency and each entity. The
agreement must preserve the authority of the Medicaid agency over the operation of the
waiver.
Non-governmental entities. The second type of local non-state entity is a nongovernmental entity. Such entities include non-profit entities established under state
and/or federal law to conduct specified human services functions in a specified
geographic area. Area Agencies on Aging usually fall under this classification. In some
states, there are non-profit, county or multi-county developmental disabilities authorities
that serve as the single point of entry for state-funded services and conduct other
specified activities. Other states have established non-governmental regional authorities
that include elected officials on their governing bodies but are not considered to be
governmental entities. When entities of this type perform waiver operational and
administrative functions, there must be a contract that details the waiver operational
functions that these entities perform. When the waiver is not operated by the Medicaid
agency, this contract may be structured as a three-party agreement (e.g., the signatories to
the contract are the non-governmental entity, the Medicaid agency, and the operating
agency).

When waiver operational responsibilities are carried out by these types of entities, select the
appropriate response for the type of entity and provide a brief description of the nature of these
entities (e.g., “non-profit developmental disabilities authorities that serve one or more counties
that are established under the provisions of the following state statutes _____”). This item
permits the selection of both types of entities if appropriate (e.g., waiver operational functions
and activities are carried out by both public and non-governmental agencies).
When using these types of entities to perform waiver operational activities, the state Medicaid
agency should expressly delegate the performance of these activities in writing. Do not include
copies of contracts or agreements with local non-state entities when submitting the application.
However, such contracts or agreements must be readily available to CMS upon request through
the Medicaid agency or the operating agency (if applicable).

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Item A-5: Responsibility for Assessment of Performance of Contracted and/or
Local/Regional Non-State Entities
Instructions
This item is only completed when contracted entities (as indicated in Item A-3) and/or
local/regional non-state entities (as indicated in Item A-4) perform waiver operational and
administrative functions. In the text field, specify the state agency or agencies responsible for
assessing the performance of local/regional non-state entities in conducting waiver operational
and administrative functions. When more than one state agency is responsible for assessing
performance, briefly describe the responsibilities of each agency.
Technical Guidance
When contracted entities and/or local/regional non-state entities perform waiver operational and
administrative functions, the performance of such entities must be overseen and assessed by a
state agency. Assessment may be performed directly by the Medicaid agency and/or the
operating agency (if applicable). If the operating agency assesses the performance of these
entities, this responsibility should be reflected in the interagency agreement between the
Medicaid agency and the operating agency.
Item A-6: Assessment Methods and Frequency
Instructions
Again, this item is only completed when contracted entities and/or local/regional non-state
entities perform waiver operational and administrative functions, as indicated in Items A-3
and/or A-4. In the text field, describe the methods that are used to assess the performance of
contracted and/or local/regional non-state entities to ensure that they perform assigned waiver
operational and administrative functions in accordance with waiver requirements. Also specify
how often performance is assessed.
Technical Guidance
When waiver operational and administrative functions are conducted by contracted entities
and/or local/regional non-state entities, there must be oversight of the performance of such
entities to ensure that waiver requirements are met. The type and scope of the oversight and
performance assessment will hinge on the nature of the functions that are performed by the
local/regional non-state entities. Potential methods may include conducting on-site operational
reviews or performance audits, periodic review of performance data, participant satisfaction
surveys, focus groups, or other methods. Also, specify the frequency with which
oversight/performance assessment is conducted. When oversight is performed by the operating
agency, there must be procedures for the operating agency to report performance assessment
results to the Medicaid agency and the performance of the operating agency in conducting such
assessments must be subject to oversight by the Medicaid agency.
In the case of section 1915(c) waivers that operate concurrently with a Medicaid managed care
authority, the description of oversight methods may include cross-references to appropriate
sections of the Medicaid managed care authority application that address oversight of the
performance of managed care entities.
The quality improvement strategy needs to describe how the state assures that the Medicaid
agency maintains its authority over the waiver. Oversight of the performance of contracted
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and/or local/regional non-state entities is an element of this assurance. As applicable, the
oversight methods described here may be cited in the quality improvement strategy rather than
repeated.
CMS Review Criteria
When local/regional non-state entities perform waiver operational and administrative
functions, the waiver describes:
•
•
•
•

The methods that are used to assess the performance of contracted and/or local/regional
non-state entities to ensure that they perform assigned waiver operational and
administrative functions in accordance with waiver requirements.
Oversight methods encompass each function that is performed by contracted entities or
local/regional non-state entities as specified in Item A-7.
The frequency with which such assessments are conducted.
If assessments are performed by the operating agency, the conduct of such assessment is
subject to review by the Medicaid agency to ensure that the operating agency is exercising
its responsibilities and there are procedures that provide for the reporting of assessment
results to the Medicaid agency.

Item A-7: Distribution of Waiver Operational and Administrative Functions
Instructions
In the table, check the entity or entities that have responsibility for conducting each of the waiver
operational and administrative functions that are listed. Ensure that Medicaid is checked when
the single state Medicaid agency (1) conducts the function directly; (2) supervises the delegated
function; and/or (3) establishes and/or approves policies related to the function. Note: More than
one box may be checked per item. Note: Medicaid eligibility determinations can only be
performed by the State Medicaid Agency (SMA) or a government agency delegated by the SMA
in accordance with 42 CFR § 431.10. Thus, eligibility determinations for the group described in
42 CFR § 435.217 (which includes a level-of-care assessment, because meeting a 1915(c) level
of care is a factor of determining Medicaid eligibility for the group) must comply with 42 CFR §
431.10. Non-governmental entities can support administrative functions of the eligibility
determination process that do not require discretion including, for example, data entry functions,
IT support, and implementation of a standardized level-of-care assessment tool. States should
ensure that any use of an assessment tool by a non-governmental entity to evaluate/determine an
individual’s required level-of-care involves no discretion by the non-governmental entity and
that the development of the requirements, rules, and policies operationalized by the tool are
overseen by the state agency.
Technical Guidance
This table provides CMS with an overview of the distribution of responsibilities for conducting
selected waiver operational and administrative functions (as described above) among the entities
that have waiver operational and administrative roles. The columns in the table include the four
types of entities that may be involved in the operation of a waiver – the Medicaid agency, an
operating agency, contracted entities, and local/regional non-state authorities.

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For each of the functions listed, indicate the entity or entities that have significant responsibilities
in performing or supervising a function. More than one type of entity may be involved in
performing a function.
CMS Review Criteria
•

The entity or entities that have significant responsibilities in directly performing each
of the functions are indicated.

•

The SMA is checked when it (1) conducts the function directly; (2) supervises the
delegated function; and/or (3) establishes and/or approves polices related to the
function.

Quality Improvement: Administrative Authority of the Single State Medicaid Agency
Pursuant to 42 CFR § 431.10, the Medicaid agency retains ultimate administrative authority and
responsibility for the operation of the waiver program by exercising oversight of the performance
of waiver functions by other state and local/regional non-state agencies (if appropriate) and
contracted entities.
Instructions
The QIS describes how the state Medicaid Agency retains ultimate authority for the operation of
the waiver program. CMS expects the description to include:
•

•
•

Activities or processes that are related to discovery and remediation, i.e., review,
assessment or monitoring processes; who conducts the discovery or remediation activities
and with what frequency, along with the state’s method for analyzing information from
individual problems, identifying systemic deficiencies, and implementing remediation
actions. These monitoring activities provide the foundation for quality improvement by
generating information regarding compliance, potential problems and individual
corrective actions. The information can be aggregated and analyzed to measure the
overall system performance in meeting the waiver assurances. The types of information
used to measure performance, should include relevant quality measures/indicators.
The entity or entities responsible for reviewing the results (data and information) of
discovery and remediation activities to determine whether the performance of the system
reflects compliance with the assurances; and
The frequency at which system performance is measured.

Technical Guidance
Performance measures for administrative authority should not be duplicative measures found in
other appendices of the waiver application. As necessary and applicable, performance measures
should focus on:
•
•
•

Uniformity of development /execution of provider agreements throughout out all
geographic areas covered by the waiver
Equitable distribution of waiver openings in all geographic areas covered by the waiver
Compliance with HCBS settings requirements and other new regulatory components

This QIS element focuses on discovery and remediation activities that is, processes to assess,
review, evaluate or otherwise analyze a program, process, operation, or outcome. Specifically,
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the evidence produced as a result of discovery and remediation activities should provide a clear
picture of the state’s compliance in meeting an assurance.

CMS Review Criteria
•

The discovery of compliance with this assurance and the remediation of identified
problems must address:
o How the Medicaid agency exercises oversight over the performance of
delegated waiver functions by other entities;
o How frequently oversight is conducted; and
o The entity (or entities) responsible for the discovery and remediation activities.

Appendix B: Participant Access and
Eligibility
Brief Overview
This Appendix specifies the target group(s) of Medicaid beneficiaries that the waiver serves, its
scope (i.e., how many persons the waiver serves), and processes associated with entry into the
waiver. A state has considerable flexibility in selecting the groups that the waiver serves. When
completing this appendix, it is useful to keep in mind that in order for an individual to participate
in the waiver, pursuant to 42 CFR § 441.301(b) the person must:
•

Meet an institutional-equivalent level of care specified for the waiver (in Item 1-F of the
Application
(Module 1));

•

Be in the waiver target group specified by the state;

•

Be in a state plan Medicaid eligibility group that is included in the waiver; and,

•

Choose to receive waiver rather than institutional services under the state plan.

Provided that the state has the capacity to enroll additional participants and the foregoing
conditions are met, FFP is available for the waiver services furnished to a person once a service
plan has been prepared for the waiver entrant in accordance with 42 CFR § 441.301 (b)(1)(i).
No FFP is available for waiver services prior to the date that the service plan is completed. FFP
for activities related to the entrance of a person to the waiver that are conducted prior to this date
may be eligible for administrative FFP or, if applicable, under a state’s coverage of targeted case
management services under the state plan.
This Appendix has the following elements:
•
•
•

The target group(s) served in the waiver (Appendix B-1);
How entry to the waiver is affected by the expected cost of home and community-based
services when compared to the cost of institutional services (termed the “individual cost
limit”) (Appendix B-2);
How many individuals will be served each year during the period that the waiver is in
effect and how that number is managed (Appendix B-3);
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•
•
•
•
•

The Medicaid eligibility groups that may participate in the waiver (Appendix B-4);
When applicable, the post-eligibility treatment of income policies that apply to
individuals who secure Medicaid eligibility by virtue of their participation in the waiver
(Appendix B-5);
How the level of care of individuals is evaluated (Appendix B-6);
How individuals are afforded the freedom of choice between waiver and institutional
services (Appendix B-7); and
How meaningful access to the waiver is provided to Limited English Proficient (LEP)
individuals (Appendix B-8).

Appendix B-1: Specification of the Waiver Target Group(s)
Overview
“Target group” refers to the specific group or groups of individuals who meet an institutional
level of care (in Item 1-F of the Application module) which a state determines that it wants to
serve in the waiver. A state may provide waiver services to any individual who requires a level
of care specified for the waiver or it may instead elect to offer services only to specific
subgroups of individuals who meet the level of care requirement (e.g., only children with
developmental disabilities who require the ICF/IID level of care).
This Appendix provides for the selection of one or more (at the state’s option) of the three broad
target groups that may be served in a waiver and specific subgroups within each of the three
groups. It also provides for specifying the age range of the individuals who are served in the
waiver. Waiver target groups also may be specified in greater detail. When a participant reaches
the maximum age specified for a target group, the appendix also provides for describing the
transition planning procedures that are followed.
In accordance with final rule CMS 2249-F, states have the option to include multiple target
groups within one waiver. This regulatory change will enable states to design programs to meet
the needs of Medicaid-eligible individuals and potentially achieve administrative efficiencies.
For example, a growing number of Medicaid-eligible individuals with intellectual disabilities
reside with aging caregivers who are also eligible for Medicaid. The change will enable the state
to design a coordinated section 1915(c) waiver structure that meets the needs of the entire family
that, in this example, includes both an aging parent and a person with intellectual disabilities. In
this illustration, the family currently would be served in two different waivers, but with the
proposed change, both could now be served under the same waiver program.
The revisions to §441.301(b)(6) allow states, but not require them, to combine target groups.
Under this rule, states must still determine that without the waiver, participants will require
institutional level of care, in accordance with section 1915(c) of the Act. The regulation does not
affect the cost neutrality requirement for section 1915(c) waivers, which requires the state to
assure that the average per capita expenditure under the waiver for each waiver year not exceed
100 percent of the average per capita expenditures that will have been made during the same year
for the level of care provided in a hospital, nursing facility, or ICF/IID under the state plan had
the waiver not been granted.
The state must assure CMS that the waiver meets the needs of each individual regardless of
target group and that individuals have equal access to all needed services. This means that there
may not be different benefit packages for each target group.
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Detailed Instructions for Completing Appendix B-1
Item B-1-a: Target Group(s)
Instructions
Select one or more of the three principal target groups. For the target group(s) selected, select
one or more of the subgroups listed. For each subgroup that is selected, specify the minimum
age at which individuals are considered for enrollment to the waiver (if a child may be enrolled
at birth, the minimum age is “0”). If there is a maximum age that applies to entrance to the
waiver, specify the maximum age. For example, if individuals are considered for enrollment up
to age 22, the maximum age that would be indicated in the table is “21” (through age 21). If
there is no maximum age that applies to enrollment, check the final column instead of specifying
a maximum age.
Technical Guidance
CMS regulation at 42 CFR § 441.301(b)(6) requires that a waiver be limited to one or more of
the following target groups or any subgroup thereof:
• Aged or disabled, or both;
• Individuals with Intellectual Disabilities or a developmental disability, or both;
• Persons with mental illnesses.
CMS regulation at 42 CFR § 441.301(b)(1) requires that HCBS be provided only to recipients
who would otherwise require services at the level of care in a Medicaid certified hospital,
nursing facility, or ICF/IID.
Individuals who are in the waiver target group and would otherwise require the Medicaid
covered level of care specified for the waiver may be considered for entrance to the waiver.
Both conditions must be met.
For purposes of this chart, both the minimum and maximum ages refer to the age of an individual
on the date of entrance to a waiver. The waiver may provide (in the additional target group
criteria) that a person may continue to participate in a waiver beyond the maximum age specified
in this chart.
Aged or Disabled Group
This target group usually is composed of individuals who otherwise would require the level of
care furnished in a hospital and/or nursing facility.
For convenience, the “aged or disabled” group is further divided into two major subgroups. The
first major subgroup includes older persons (“aged”) and people with disabilities (“disabled”). A
waiver may serve both or only one of these groups. For purposes of the chart, the term “aged”
generally has the same meaning as in §1905(a)(iii) of the Act (i.e., persons age 65 and older).
However, a state may specify a different minimum age for this group to reflect state practice
(e.g., persons age 60 and older). The term disabled generally means individuals with a disability
under the age of 64.
The “Specific Recognized Subgroups” section lists specific conditions (e.g., brain injury) within
the aged/disabled group that many states have elected to target in waivers. If the waiver is
limited to one or more of these specified subgroups, select the specific subgroup(s) under the
broader aged or disabled groups. The waiver may be targeted still more discretely than the
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groups and subgroups listed in this chart. Additional target group criteria may be specified in the
next item.
Intellectual Disability or Developmental Disability Group
This target group (as provided in 42 CFR § 441.301(b)(1)(iii)(C) is composed of individuals who
otherwise would require the level of care furnished in an ICF/IID, which is defined in 42 CFR §
440.150(a)(2) as serving persons with “intellectual disability or persons with related conditions.”
States are advised that the ICF/IID level of care is reserved for persons with intellectual
disability or a related condition, as defined in 42 CFR § 435.1009. Participants in a waiver
linked to the ICF/IID level of care must meet the “related condition” definition when they are not
diagnosed as having an intellectual disability (e.g., persons with autism). Some persons who
might qualify as having a “developmental disability” under the Federal Developmental
Disabilities Assistance and Bill of Rights Act of 2000 may not meet ICF/IID level of care.
While “Developmental Disability” and “Related Conditions” overlap, they are not equivalent.
The definition of related conditions is at 42 CFR 435.1009, and is functional, rather than tied to a
fixed list of conditions.
Mental Illness Group
The mental illness group (as provided in 42 CFR § 441.301(b)(6)(ii)) is divided into two
subgroups. The “serious emotional disturbance” group should be selected when the waiver
would serve children and youth with mental illness who require the level of care furnished in an
inpatient psychiatric facility that is licensed as hospital for individuals under age 21 (or up to age
22, if provided in the state plan) (as provided in 42 CFR § 440.160).
The “mental illness” subgroup should be selected when the waiver would serve (a) individuals
with mental illnesses who require the level of care furnished in a nursing facility or (b) persons
with mental illnesses aged 65 and older who would, but for the waiver receive services in an
IMD (as provided in 42 CFR § 440.140). With respect to persons with mental illnesses, a waiver
may target adults with mental illnesses ages 22-64 when these persons are determined to require
the nursing facility level of care. Individuals with serious mental illnesses often have functional
limitations that are similar to those of other persons who require the nursing facility level of care.
However, a waiver may not target adults with mental illness ages 22-64 who would, but for the
waiver, require services furnished in an Institution for Mental Disease (IMD), and regardless of
whether the IMD is a hospital or a nursing facility. Medicaid payment is not available for
persons in this age range who are served in an IMD and, consequently, an HCBS waiver cannot
target such individuals.
CMS Review Criteria
• The target groups align with the levels of care specified in Item 1-F of the Application
(Module 1).
Item B-1-b: Additional Criteria
Instructions
In the text field, specify any additional criteria that further specify the target group(s) served by
the waiver.

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Technical Guidance
More discrete targeting criteria may be specified over and above the target group/subgroup and
age-ranges selected in the previous item. When additional criteria are not specified, it is
presumed that the waiver is available to all persons who need the level(s) of care specified in the
Application (Module 1) and are in the groups/subgroups selected in Item B-1-a. The additional
criteria may be specified in terms of nature or degree or type of disability, or other reasonable
and definable characteristics that distinguish the target group from other persons who may need
the level(s) of care specified for the waiver. Such additional targeting criteria may include but
are not limited to:
•
•
•

Nature or type of disability;
Specific diseases or conditions; and
Functional limitations (e.g., extent of assistance required in activities of daily (ADLs)
and/or instrumental activities of daily living (IADLs).

Additional criteria also may be specified in order to align the waiver to service population
eligibility criteria that are specified in state law (for example, when a state’s definition of
developmental disability specifies that the disability must have been experienced before age 18
rather than age 22). In specifying additional targeting criteria, clearly define the terms that are
used to specify membership in the target groups.
When the waiver limits the age range of the target population (e.g., to adults with physical
disabilities through age 64), a state may provide that persons who enter the waiver may continue
to participate in the waiver after they reach the maximum age that applies to entrance to the
waiver. If the state provides for continuing individuals on a waiver past the specified maximum
age, specify the continuation policies that apply.
A waiver may target exclusively individuals who want to direct at least some or all of their
waiver services by employing the participant direction opportunities that are specified in
Appendix E. This targeting criterion should be reflected here.
CMS Review Criteria
The waiver target group or groups are sufficiently well defined to permit the determination that
an individual meets the target group criteria.
Item B-1-c: Transition of Individuals Affected by Maximum Age Limit
Instructions
When there is a maximum age limitation on individuals who may be served in the waiver,
describe the transition planning procedures for participants affected by the age limit in the text
field. Otherwise, select “not applicable.”
Technical Guidance
When an individual’s participation in the waiver is subject to an upper age limit, there should be
transition planning procedures that are followed to assist participants who “age out” of the
waiver (i.e., the participant no longer will be eligible once the person reaches the waiver’s age
limit). As noted previously, in its additional targeting criteria, a state may provide for the
continuation of services to participants whose age exceeds the maximum age limit that applies to
entrance to the waiver. For example, if a waiver serves the “disabled” under age 65, a state may
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provide that individuals may continue to participate in the waiver once they reach age 65. If the
waiver does not provide for continuation of individuals beyond the age limit that is applied to
entrants to the waiver or continuation is not feasible (due to level of care considerations),
transition planning is appropriate. Transition planning is most effective when it is initiated
sufficiently in advance of the date that the participant will be terminated from the waiver in order
to provide continuity of services to the extent feasible.
Transition planning may include identifying other public programs for which the participant may
qualify, informing the person of such programs and linking the person to them. A state also may
provide that participants affected by an age limit are referred to and/or enrolled in another HCBS
waiver for which the individual may be eligible. A state may provide that such individuals
receive priority consideration for entrance into another waiver. A state is not obligated to ensure
that individuals adversely affected by a maximum age limit receive services after termination
from the waiver.
CMS Review Criteria
When the waiver does not provide for the continuation of services to waiver participants beyond
the age limit specified in the waiver, there are transition planning procedures that link affected
participants to another waiver or other services and supports that provide continuity of services
in the community to the extent feasible.
Appendix B-2: Individual Cost Limit
Overview
In order to comport with waiver cost neutrality requirements at 42 CFR § 441.303(f), a state may
restrict enrollment into, and ongoing participation in, a waiver based on the expected cost of the
home and community-based services that would be furnished to a person. In Appendix B-2, the
individual cost limit (if any) under which the waiver operates is specified. The individual cost
limit is specified in relationship to the costs of the institutional services at the level of care that a
person requires. The cost comparison is based on the expected costs of home and communitybased waiver services plus the costs of other state plan services that the person likely will require
to the average cost of institutional services at the level of care the person requires plus the costs
of state plan services that would be furnished to the person in an institutional setting. When an
individual cost limit is specified, CMS expects the state to specify the state’s safeguards to
address the needs of waiver participants whose continuation on the waiver may be subsequently
affected by the individual cost limit.
A waiver’s design may include reasonable methods to control overall spending, including the
specification of an individual cost limit. In combination, the individual cost limit, the waiver’s
service array, the availability of other services under the state plan and from other sources, and
any other limits on the amount and scope of services must be sufficient to assure the health and
welfare of the waiver’s target population.
When completing this Appendix, it is important to keep in mind that the individual cost limit
functions as a criterion against which the determination is made about whether to offer entrance
to a waiver to an individual and the person’s continued participation in the waiver post-entrance.
The individual cost limit does not specify an amount of waiver services to which an individual is
entitled. The amount of waiver services that a person receives is determined through the
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participant-centered service plan development process and is subject to any other limitations that
a state may impose on the amount, duration and frequency of specific waiver services as
provided in Appendix C-3 or the overall amount of groups of services or the total amount of
services in the service plan, as specified in Appendix C-4. The individual cost limit (if imposed)
governs entrance to the waiver (e.g., if the expected costs of the services that a person requires
exceed the cost limit, the person will be denied entrance) and continued stay on the waiver.
Given that the individual cost limit is a criterion for entrance and continued stay on a waiver, the
state may elect only one individual cost limit, applied fairly and uniformly to all potentially
eligible individuals.
Detailed Instructions for Completing Appendix B-2
Item B-2-a: Individual Cost Limit
Instructions
Select one of the four choices presented. As applicable, provide the additional information as
specified.
Technical Guidance
This item presents four choices concerning the individual cost limit. One of these choices must
be selected:
•

•

No Cost Limit. When an individual cost limit is not imposed, this means that no
otherwise eligible individual will be denied entrance to the waiver solely based on the
anticipated costs of the home and community-based services that the person may require.
Again, this does not mean that the person is entitled to unlimited home and communitybased services once enrolled in the waiver program. The amount of services that will be
furnished to an individual is determined based on assessed needs and as specified during
the development of the service plan and is subject to any other limitations specified in
Appendix C. This selection allows the entrance to the waiver of individuals who may
require an amount of home and community-based services that exceeds the average cost
of the institutional services for the level of care that the person requires. When this
choice is selected, it is not necessary to complete the remaining two items (Items B-2-b
and B-2-c) in this Appendix. When any of the other choices are selected, the next two
items need to be completed.
The selection of this choice (or any of the other three choices) does not permit a state to
implement practices that de facto amount to the imposition of a cost limit (for example,
by limiting or managing entrance to the waiver by selecting individuals who are expected
to have relatively low costs or requiring that the costs of individuals who require
intensive services must be offset by only permitting the entrance of persons with offsetting lower costs). An individual cost limit must be applied uniformly to all potential
waiver entrants. While a waiver may be managed in the “aggregate” to assure costneutrality or achieve a targeted level of expenditures per waiver participant, entrance
determinations must be made on an individual basis.
Cost Limit in Excess of Institutional Costs. A state may elect to offer entrance to the
waiver to persons when the costs of their home and community-based services are
expected to be greater than the average cost of the institutional services, as specified as
Factor G in Appendix J of the waiver, for the level of care that the person requires but set
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•

an upper limit on how much expected costs may exceed institutional costs. For example,
a state may provide for the entrance of persons whose costs are not expected to exceed
125% of institutional costs. If this choice is selected, the cost limit needs to be specified.
In addition, the state still must demonstrate cost-neutrality in the aggregate.
Institutional Cost Limit. A state may elect to limit entrance to the waiver to only those
individuals for whom the costs of home and community-based services are not expected
to exceed the average costs of the institutional services for the level of care that the
person requires. When this choice is selected, entrance to the waiver will be denied when
a person’s expected costs of home and community-based services exceed the average cost
of institutional services.
Cost Limit Lower Than Institutional Services. Finally, a state may elect to impose an
individual cost limit that is lower than the cost of the institutional services for the level of
care that the person requires. The selection of this limit generally is only appropriate in
the case of waivers that target individuals who can be expected to have available services
and supports from other sources (e.g., family caregivers or other public programs) that, in
combination with waiver services, will be sufficient to assure their health and welfare.
When a state elects this choice, it needs to specify the basis of the limit that it imposes
(i.e., the information analyzed and the rationale to support the assertion that the limit
selected ensures that individuals who enter the waiver will have sufficient services and
supports to assure their health and welfare). This evidence may be based on:
o An analysis of service utilization in a waiver that serves a similar target group;
o An analysis of service utilization in a state program that serves a similar target
group;
o The experience of a waiver that serves a similar target group in another state;
and/or
o An assessment of the service needs of individuals in the target group.
For example, if a waiver targets children with disabilities, information about the amount
of state plan services (including enhanced EPSDT services) that are typically utilized by
children with disabilities might be combined with estimates of the expected utilization of
waiver services to serve as the basis for the cost limit.
The limit that is applied also needs to be specified. This limit may be expressed as an
absolute dollar amount, a percentage (less than 100%) of the costs of the institutional
services for the level of care that the person requires or another type of limit that the state
specifies. If the limit is expressed as an absolute dollar limit, specify how the limit will
be adjusted during the period in which the waiver is in effect to account for changes in
the cost of providing services.

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CMS Review Criteria
• When the waiver imposes a cost limit that is lower than the cost of institutional services,
the limit is based on sound analysis and rationale that, within the amount of the limit, the
health and welfare of the waiver target population will be assured post entrance to the
waiver.
• When the limit is expressed as an absolute dollar limit, the waiver describes how the limit
will be adjusted during the period in which the waiver is in effect to account for changes
in the cost of providing services.
•

When a waiver imposes an individual cost limit, it is applied uniformly and fairly to all
potentially eligible individuals.

Item B-2-b: Method of Implementation of the Individual Cost Limit
Instructions
This item should be completed unless the “no cost limit” selection is made in Item B-2-a. In the
text field, specify the procedures that are followed to determine in advance of waiver entrance
that the individual’s health and welfare can be assured within the cost limit.
Technical Guidance
When an individual cost limit is established, there are procedures that are conducted during
entrance to the waiver to determine that the individual’s health and welfare can be assured within
the amount of the cost limit. Such procedures may include conducting an assessment to identify
the services that the person may require or initiating the development of a service plan in order to
ascertain the amount of waiver services that the person may require (in addition to state plan and
the other services and supports available to the person) to meet the person’s needs. When the
application of an individual cost limit results in the denial of entrance to the waiver, the affected
individual must be offered the opportunity to request a Fair Hearing, as provided in Appendix F.
CMS Review Criteria
The procedures that are specified take into account the full range of supports that the person
requires in the community and includes notification of the opportunity to request a Fair Hearing
if entrance is denied.
Item B-2-c: Participant Safeguards
Instructions
When an individual cost limit is specified, indicate the safeguards that are in effect when postentrance, a waiver participant requires the provision of services in an amount that exceeds the
cost limit in order to assure the participant’s health and welfare. Check each choice that applies
and provide the specified information.
Technical Guidance
After a person enters the waiver, the individual may experience a change in condition or
circumstances (e.g., a family caregiver no longer is available or is temporarily unavailable to
support the individual) that might necessitate the provision of additional waiver services in order
to assure the waiver participant’s health and welfare. When there is an individual cost limit, the
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need for such additional services may result in the person no longer being eligible for the waiver.
In this item, specify the safeguards that have been established in the event that the person
requires services that would cause the cost limit to be exceeded. The item specifies three types
of safeguards; these safeguards may be used in combination. These safeguards are:
•

•

The person is referred for enrollment in another waiver. This selection may be
appropriate when there is another waiver that operates under a higher individual cost
limit or no cost limit for which affected individuals might qualify. A state may provide
the continuation of waiver services until the person can be transitioned to the other
waiver. Depending on a state’s policies, referral to another waiver may or may not ensure
that the person can actually be enrolled in the other waiver;
There is provision to authorize services in excess of the individual cost limit in order
to avoid disruption to the participant. The waiver may provide for the authorization of
additional services to address time-limited or other needs for additional services in order
to support an individual until alternative arrangements are made. If this choice is
selected, describe the procedures that are followed in authorizing additional services over
the amount of the individual cost limit, including whether there is a limit on the amount
of the additional services that may be authorized or the length of time the additional
services will be provided; and
Other. A state may provide for other alternatives to address the needs of waiver
participants affected by the individual cost limit. Describe these alternatives. These
alternatives may include informing the participant of other options and making referrals
to other services in the community. Referral to other services does not necessarily ensure
that the person will be furnished such services. If need be, such alternatives may include
referral for institutional services as a last resort.

CMS Review Criteria
• The waiver specifies one or more safeguards to facilitate the continuity of services for
affected individuals in the community.
• The waiver provides for informing the participant of, and referral to, other options.
Appendix B-3: Number of Individuals Served
Overview
In this Appendix, a state specifies the maximum number of unduplicated participants who will be
served during each year that the waiver is in effect. In addition, this Appendix provides for the
selection of options that may be employed to manage the number of persons served by the
waiver. Also, the Appendix specifies (when applicable) how waiver openings are distributed
across areas of the state and policies that affect the selection of individuals for entrance to the
waiver.
By way of reference, an unduplicated participant means a unique individual who participates in
the waiver during a waiver year, regardless of when the individual entered the waiver and length
of stay on the waiver. A person who enters, exits, and re-enters the waiver during a waiver year
counts as one unduplicated waiver participant.

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Detailed Instructions for Completing Appendix B-3
Item B-3-a: Unduplicated Number of Participants
Instructions
In Table B-3-a, enter the maximum number of unduplicated participants who may be served
during each waiver year that the waiver is in effect. In the case of a new waiver (including a new
waiver to replace an approved waiver), enter figures for waiver years 1-3, or years 1-5 if
applicable. For a waiver renewal, enter figures for waiver years 1-5. The numbers entered in
this table are also entered into Table J-2-a in Appendix J (Cost-Neutrality Demonstration). The
web-based application automatically displays the correct number of rows based on whether the
state is submitting a new or renewal waiver. In addition, the web-based application links this
table to Table J-2-a.
Technical Guidance
The number specified for each waiver year constitutes the maximum limit on the unduplicated
number of participants that the waiver will serve (also known as Factor C). It is up to the state to
specify this maximum. Until the maximum number of unduplicated participants in the approved
waiver is reached, a state may not deny entry to the waiver of otherwise eligible individuals
unless the state elects to establish a point-in-time enrollment limit, adopts a phase-in or phase-out
schedule, or reserves capacity for specified purposes (see following items).As a consequence, the
number of persons who will be served should be based on a careful appraisal of the resources
that the state has available to underwrite the costs of waiver services.
Post-approval, the maximum number of unduplicated participants may be modified by
submitting a waiver amendment to CMS to increase or decrease the maximum. An amendment
to increase the maximum may be made effective to the beginning of the current waiver year.
When more individuals are served in the waiver than the maximum, the state should submit an
amendment to align the waiver with the number of individuals served. Note: An amendment to
reduce the maximum number of waiver participants below the number currently being served
may only be made effective on the date that CMS approves the amendment. Consequently, when
a reduction is necessary, an amendment should be submitted as soon as the need for a change to
the participant limit is identified. When a reduction in the maximum number of participants is
requested, the amendment request needs to include information concerning the impact of the
reduction on existing waiver participants (see Waiver Application, Submission Requirements,
Processes, and Procedures – Other Changes to Approved Waivers for additional information).
A state may find it necessary to reduce the maximum number of participants because legislative
appropriations are insufficient to support the number of persons specified in the approved waiver.
In order to affect such a reduction, a state needs to submit a waiver amendment and the
amendment must be formally approved by CMS. If a state finds it necessary to freeze waiver
enrollment or place a moratorium on new entrants to the waiver, the state also needs to submit an
amendment to CMS to revise the unduplicated participant cap for the affected waiver year.
Item B-3-b: Limitation on the Number of Participants Served at any Point in Time
Instructions
Select whether there is a limit on the number of individuals who may participate in the waiver at
any point in time during a waiver year. If there is a limit, complete Table B-3-b by specifying
the limit for each waiver year.
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Technical Guidance
In addition to specifying the maximum number of unduplicated participants, a state also may
specify the maximum number of participants who are served at any point in time during the
waiver year. Specifying such a maximum may assist in managing waiver expenditures and
taking into account participant turnover during the course of a waiver year.
For example, a waiver may provide for the enrollment of no more than 1,000 unduplicated
participants during a waiver year. Taking turnover into account, a state might establish a pointin-time enrollment limit of 950 individuals. Establishing such a limit may avoid a state’s having
to freeze entrance to the waiver before the end of the waiver year.
The decision to establish such a limit is up to the state. If the state does not wish to establish
such a limit, select the first choice. If a limit is established, select the second choice and specify
the limit for each year to which a limit will be applied. A limit may be applied to each waiver
year or only selected years. For example, when a waiver is being phased in, a state might limit
participation in the waiver by adopting a phase-in schedule as provided in Item B-3-d during the
initial period that the waiver is in effect but provide for a point-in-time limit for subsequent
waiver years. The limit that is established will be lower than the maximum unduplicated waiver
participant limit specified in Item B-3-a and should be reasonably related to the expected rate of
turnover of waiver participants.
In the case of a model waiver, the second choice should be selected when the number of
participants specified in Item B-3-a is equal to or greater than 200 and the maximum number of
participants served at any point in time may not exceed 200 persons.
CMS Review Criteria
When the waiver provides for a point-in-time limit, the limit for each waiver year is
consistent with the implied turnover rate in the average length of stay estimates in
Appendix J-2-b. (Turnover rate = Total # unduplicated persons per year / # of persons served
at any point in time.)
Item B-3-c: Reserved Waiver Capacity
Instructions
Specify whether waiver capacity is reserved for purposes specified by the state. If no capacity is
reserved, select the first choice. When capacity is reserved, complete Table B-3-c for each
purpose a state has to reserve capacity. For each purpose, provide a brief title or name for the
purpose of reserve capacity, specify the purpose for which capacity is reserved, how the amount
of reserved capacity was determined, and specify the amount of capacity reserved for each
Waiver Year.
Technical Guidance
A state may reserve a portion of a waiver’s capacity for specified purposes. Reserving waiver
capacity means that some waiver openings (a.k.a., “slots”) are set aside for persons who will be
admitted to the waiver on a priority basis for the purpose(s) identified by the state. If capacity is
not reserved, then all waiver openings are considered available to all target group members who
apply for waiver services and are eligible to receive them. Reserved capacity is not available to
persons who are not in the state-specified priority population. Examples of appropriate purposes
for which capacity may be reserved include (but are not limited to):
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•

•
•
•

Setting aside capacity to accommodate the community transition of institutionalized
persons (e.g., through a “Money Follows the Person” initiative). In this case, reserving
capacity ensures that there is waiver capacity available when individuals are ready to
transition to the community transition;
Reserving capacity to accommodate the transition of individuals from other waivers;
Reserving capacity to accommodate individuals who may require services due to a crisis
or emergency; and
Providing for the transition of individuals who age out of another waiver or other services
(e.g., youth who age out of child welfare services) in order to ensure the continuity of
their services.

Capacity may be reserved for more than one purpose. It is not appropriate to reserve capacity to
reflect uncertainties about future legislative appropriations for the waiver. Reserving capacity is
only a means to hold waiver openings for the entrance of specific sets of individuals to the
waiver. In accordance with State Medicaid Director Letter #01-006 (Olmstead Update #4), a
state may not reserve capacity in a fashion that would have the effect of limiting the number of
waiver participants who may access certain types of waiver services and, thereby, result in
creating a “waiver within a waiver.” All individuals who enter the waiver must have comparable
access to the services offered under the waiver. For example, a state may not reserve capacity in
order to limit the number of persons who receive assisted living services in a waiver.
Additionally, a state may not use this feature to control access by certain Medicaid eligibility
groups (e.g., by limiting access by the special home and community-based eligibility group (217
group) to 10% of waiver participants). Similarly, capacity may not be reserved to limit the
number of waiver participants who may direct some or all of their waiver services.
CMS Review Criteria
When capacity is reserved, it is reserved only for the purpose of holding waiver capacity for
one or more specific sets of individuals and does not violate the requirement that all waiver
participants enrolled in the waiver have comparable access to all services offered in the waiver.
Item B-3-d: Scheduled Phase-In or Phase-Out
Instructions
When entrance to the waiver is subject to a phase-in schedule or the waiver is being phased-out,
select the second choice and complete Attachment #1 to Appendix B-3. If the waiver is not
subject to a phase-in or phase-out schedule, select the first choice.
Technical Guidance
A state may phase-in or phase-out a waiver over the course of a waiver year or multiple waiver
years. For example, a state may provide for the entrance of 100 persons per month to the waiver
during the first year of a waiver’s operation. Alternatively, a state may decide to phase out a
waiver by transitioning individuals to another waiver over an extended period of time. A state
may limit waiver capacity month-by-month during a waiver year by tying the maximum number
of waiver participants who may be served each month to a phase-in or a phase-out schedule.
Absent such a limit, a state is obligated to allow individuals to enter the waiver up to the
participant limit for the waiver year as specified in Item B-3-a or B-3-b. When a waiver is being
phased-in or phased out, the average length of stay of individuals on the waiver is affected. Item
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J-2-a in Appendix J (Cost Neutrality Demonstration) provides for describing the basis of the
estimate of the average length of stay on the waiver. In the description, reference may be made
to this item when the waiver is being phased-in or phased-out.
Attachment #1 to Appendix B-3: Waiver Phase-In or Phase-Out Schedule
Instructions
As previously noted, this attachment is completed only when a waiver is being phased in or
phased-out.
Item a: Select whether the waiver is being phased-in or phased out.
Item b: Waiver Years Subject to Phase-In or Phase-Out Schedule
Indicate the waiver years during which phase in or phase out will take place. Phase-in or phaseout may extend over multiple waiver years.
Item c: Phase-In or Phase-Out Time Period
In the table, specify the first calendar month of each waiver year. For example, if a waiver is
effective on October 1, enter October. In the next row, enter the month and the waiver year
when phase-in or phase-out will begin. In the final row, enter the month and the waiver year
when the phase-in or phase-out will be completed.
Item d: Phase-In or Phase Out Schedule
This table should be completed for each waiver year during which phase-in or phase-out is
taking place. If phase-in or phase-out will take place over more than one waiver year, add
another page to the application (by inserting a page break) and copy this table onto to the new
page. An example of a completed table is provided below.

Example: Phase-In or Phase-Out Schedule
Waiver Year:

One

Month

Base Number of
Participants

Change in Number
of Participants

Participant Limit

October

3,500

November

3,500

December

3,500

January

3,500

150

3,650

February

3,650

150

3,800

March

3,800

150

3,950

April

3,950

150

4,100

May

4,100

150

4,250

June

4,250

150

4,400

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Example: Phase-In or Phase-Out Schedule
July

4.400

4,400

August

4,400

September

4.400

4,400

Waiver Year: In the table, indicate the waiver year for which the phase-in or phase-out schedule
applies. Complete the remainder of the table as follows:
Month Column: Enter the first month of the waiver year and fill the remainder of the column
with the names of the subsequent months through the end of the waiver year.
Base Number of Participants: In this column, enter the number of participants who will be
served during the month, not counting the number who will be added to or leave the waiver
during the same month.
Change in Number of Participants: Enter the number of participants who will be added to the
waiver or leave the waiver during the month.
Participant Limit: The participant limit for a month is the sum of the base number of
participants plus the number who will enter the waiver or less the number who will leave the
waiver. This participant limit becomes the base number of participants for the next subsequent
month.
Item B-3-e: Allocation of Waiver Capacity
Instructions
Select whether waiver capacity is allocated/managed on a statewide basis or, instead, is allocated
based on local/regional geographic area. In the latter case, specify: (a) the entities or areas upon
which waiver capacity is allocated; (b) the methodology that is employed to allocate capacity;
and, (c) policies for the reallocation of unused capacity among local/regional non-state entities or
geographic areas.
Technical Guidance
“Allocation of waiver capacity” refers to the practice in some states (especially states where
waivers are operated through local/regional non-state entities) of allocating waiver openings
(a.k.a., “slots”) by geographic area. This contrasts to managing entrance to the waiver on a
statewide basis (or less than statewide basis when there is a waiver of statewideness, but the state
manages entrance across all areas served by the waiver) where entrance to the waiver is not
based on geographic area. The practice of allocating waiver capacity by geographic area is
permissible so long as the methods to allocate waiver capacity result in similar access to the
waiver among the geographic areas where the waiver operates. When waiver capacity is
allocated in a fashion that results in substantially unequal access among geographic areas, the
waiver may not meet statewideness requirements.

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The allocation of waiver capacity by geographic area may not impede the free movement of
waiver participants from area to area in a state. That is, waiver “slots” must be portable across
areas of the state.
Appropriate methods of allocating waiver capacity by geographic area may include taking into
account the population of each area, other demographic factors, assessed need for waiver
services by area or a combination of such factors. A state may find it necessary to implement
strategies to adjust allocations of waiver capacity on a multi-year basis in order to achieve
similar access to waiver services across geographic areas. For example, a state may reserve
some waiver capacity to increase allocations in underserved areas.
When waiver capacity is allocated by geographic area, there also should be methods to reallocate
unused capacity to areas where additional capacity may be needed (e.g., where there are waiver
waiting lists). States cannot operate a waiver in a fashion that results in individuals waiting for
services in some geographic areas when there is unused capacity in other areas. When a state
intends to limit the number of persons served by geographic area, it needs to submit a waiver
application and an accompanying waiver of statewideness in order to confine the operation of the
waiver to the geographic area.
CMS Review Criteria
When waiver capacity is allocated to local/regional non-state entities or geographic areas:
•
•
•
•
•

The waiver describes the methodology that is employed to allocate capacity.
The methodology is based on objective factors/criteria.
The waiver specifies the entities to which capacity is allocated, if applicable.
There are policies to reallocate unused capacity among local/regional non-state entities or
geographic areas.
The state’s practices do not violate the requirement that individuals have comparable
access to waiver services across the geographic areas served by the waiver or impede the
movement of participants across geographic areas.

Item B-3-f: Selection of Entrants to the Waiver
Instructions
In the text field, specify the policies that apply to the selection of individuals for entrance to the
waiver.
Technical Guidance
The state’s limit on the number of individuals who participate in a waiver may result in a waiting
list for waiver services (e.g., entrance to the waiver of otherwise eligible applicants must be
deferred until capacity becomes available as a result of turnover or the appropriation of
additional funding by the legislature). Entrance to the waiver may not be deferred when there is
unused waiver capacity (except when a state has established a point-in-time limit, reserved
capacity or made entrance subject to a phase-in schedule). If it is necessary to defer the entrance
of individuals to the waiver, the state should have policies that govern the selection of
individuals for entrance to the waiver when capacity becomes available. These policies should
be based on objective criteria and applied consistently in all geographic areas served by the
waiver. Examples of appropriate policies may include (but are not necessarily limited to):

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•

Entry to the waiver is offered to individuals based on the date of their application for the
waiver; or,

•

Entry to the waiver is prioritized based on the imminent need for services that is determined
through an assessment process.

When the state operates the waiver in a fashion that does not entail deferring the entrance of
otherwise eligible persons, simply state that the waiver provides for the entrance of all eligible
persons.
The state should not base policies for the selection of otherwise eligible individuals on factors
such as the expected costs of waiver services or the types of services that an individual might
require post-entrance. A state may not delegate the authority to establish policies for the
selection of individuals to enter the waiver to local/regional non-state entities or other types of
entities.
CMS Review Criteria
•

There are state-established policies governing the selection of individuals for entrance
to the waiver.

•

Policies are based on objective criteria and do not violate the requirement that otherwise
eligible individuals have comparable access to all services offered in the waiver.

Appendix B-4: Medicaid Eligibility Groups Served in the Waiver
Overview
In this Appendix, the state specifies the Medicaid eligibility groups that are served in the waiver.
In order for an eligibility group to be included in the waiver, it must already have been included
in the state plan.
Detailed Instructions for Completing Appendix B-4
Item B-4-a: State Classification
B-4-a-1 State Classification
Instructions
Select whether the state is: (a) a section1634 state; (b) an SSI-criteria state; or, (c) a 209(b) state
as described below. In the web-based application, the selection made for this item links to
Appendix B-5 and calls up the appropriate post eligibility treatment of income sections for
section 1634, SSI Criteria, or 209(b) states.
Technical Guidance
With respect to Supplemental Security Income (SSI) beneficiaries, a state may be:
•

A section 1634 State. Under the provisions of section 1634(a) of the Act, a state may
enter into a contract with the Social Security Administration (SSA) under which SSA
determines Medicaid eligibility at the same time that eligibility for SSI benefits and/or
federally-administered state supplementary payments is determined. In §1634 states, SSI
recipients do not make a separate application for Medicaid and are automatically enrolled
in Medicaid;
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•
•

An “SSI-Criteria State.” In these states, SSI beneficiaries are categorically eligible for
Medicaid but must make a separate application for Medicaid; or,
A section 209(b) State. The state applies rules that are more restrictive than SSI, but no
more restrictive than the rules used by the state’s Medicaid program on January 1, 1972,
in determining the Medicaid eligibility of SSI beneficiaries.

These are mutually exclusive categories. State officials who are familiar with Medicaid
eligibility policies under the state plan should be consulted when completing this item. The
response to this item determines which post-eligibility treatment of income rules apply when
Appendix B-5 is completed.
B-4-a-2 Miller Trust State
Instructions
Indicate whether the state is a Miller Trust State.
Technical Guidance
Refer to guidance contained in Appendix B-5 of these instructions regarding Miller Trusts.
CMS Review Criteria
The selection comports with the state plan.
Item B-4-b: Medicaid Eligibility Groups Served in the Waiver
Instructions
Specify each Medicaid eligibility group that is included in the waiver. Where indicated, furnish
the additional information about a group.
Technical Guidance
In order to participate in a waiver, a person not only must require the level of care specified for
the waiver and meet the waiver’s target group criteria but also be a member of a Medicaid
eligibility group (e.g., SSI beneficiaries) that a state has decided to include in the waiver. A state
may include a Medicaid eligibility group in the waiver only when it includes the same group in
its state plan. In other words, operating an HCBS waiver does not permit a state to expand
Medicaid eligibility beyond what already is provided in the state plan. If a group is not included
in the state plan, it may not be included in the waiver.
If a group is included in the Medicaid state plan, a state has the option to include the group in the
waiver. The impact of a waiver in assisting individuals to remain in the home and community is
enhanced when the waiver includes all applicable Medicaid eligibility groups.
In the context of the HCBS waiver program, Medicaid eligibility groups fall into two broad
categories: (a) eligibility groups that include individuals who are eligible for Medicaid without
regard to whether they are institutionalized (e.g., SSI beneficiaries) and (b) eligibility groups that
include individuals who would not be eligible for Medicaid except in an institutional setting
(e.g., the special income level group). When the second group is included in the waiver (as
provided by section 1902(a)(10)(A)(ii)(VI) of the Act), institutional eligibility rules (which are
usually more generous than the “community rules” that apply to the first category) may be used

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in the community. This second group is referred to as the “special home and community-based
services waiver eligibility group” as provided in 42 CFR § 435.217 (see below).
Appendix B-4 provides for checking off specified Medicaid eligibility groups that are included in
the waiver. The listed community groups often are included in waivers. Since many states have
added the Medicaid “Buy-In” eligibility groups to their state plans, checkoffs have been included
for both the BBA-97 and TWWIA buy-in groups. However, this list is not exhaustive. There are
over 50 distinct groups that a state may include in its state plan. If there are additional groups
that a state includes in the waiver over and above those listed, they should be specified (by citing
the appropriate statute or regulation) in the text box provided at the end of the list. When
completing this part of the application, personnel at the Medicaid agency who are well versed
concerning the eligibility groups included in the state plan should be consulted to ensure that the
appropriate selections are made.
Note: While not affecting any of a state’s choices or elections in Appendix B-4, states should be
aware, for eligibility-related purposes, that they may target less restrictive financial
methodologies at individuals in need of HCBS authorized under section 1915(c) of the Act
(among other HCBS-related authorities), which may include (but is not limited to) partially or
totally disregarding spousal resources. This authority is described in State Medicaid Director
Letter #21-004 (December 7, 2021). A state that wishes to adopt less restrictive methodologies
for individuals in need of section 1915(c) waiver services may do so by submitting a state plan
amendment (SPA) pursuant to 42 CFR § 435.601(f)(2).
There are additional requirements with respect to covering medically needy eligibility groups
under home and community-based services waivers. States that limit coverage of medically
needy by eligibility group can only cover those medically needy groups covered in the state plan.
For example, if a state only covers the mandatory medically needy group in its state plan, it may
only cover those individuals on the waiver. If a state does not cover medically needy individuals
in an institution, it cannot cover them in the waiver. For example, if a state does not cover
nursing facility services for medically needy, it cannot provide HCBS waiver services to
medically needy individuals who require the nursing facility level of care.
There are check offs for including the “special home and community-based services waiver
eligibility group” under 42 CFR § 435.217. All individuals in this group may be included or the
state may elect to include only specified groups (the second response). An individual is eligible
under the § 435.217 group, if the individual (1) is otherwise eligible for the HCBS waiver but
would not be eligible for Medicaid while he or she is living in the community; (2) is eligible (or
would be eligible) under the state Medicaid plan without spending down income if he or she
were in a hospital, nursing facility or ICF/IID; and (3) receives waiver services. Check off
whether the § 435.217 group is included and then indicate the specific groups that are included
and, if necessary, identify any other groups that are included but not listed. The web-based
application links the selection of the § 435.217 group to completing Appendix B-5 (Post
Eligibility Treatment of Income).
The interplay between medically needy eligibility and eligibility under the § 435.217 group is as
follows:
•

For section 1634 and SSI criteria states, the individual would be eligible only in an
institution as categorically needy and medically needy without spending down income.
The HCBS waiver and the § 435.217 group permit the special income level group to be
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covered in the community. Individuals with income under the special income level are
categorically needy. Therefore, the basis for qualifying for the waiver changes from
medically needy to the special income level group for individuals with income under the
special income level group without a spenddown. However, a medically needy
individual with income over the special income level cannot spend down to the special
income level and be eligible under the § 435.217 group.
•

For 209(b) states, the individual would be eligible for Medicaid in the institution without
a categorically needy or medically needy spenddown. Mandatory categorically needy
individuals eligible under 42 CFR § 435.121 are not eligible under the § 435.217 group
(e.g., SSI recipients). However, optional categorically needy individuals can be eligible
under the §435.217 group. The HCBS waiver and the § 435.217 group permit the special
income level group to be covered in the community. Individuals with income under the
special income level are categorically needy. Therefore, individuals who are both
medically needy and optional categorically needy and have income below the special
income level would be eligible under the special income level group without a
spenddown. However, individuals with income over the special income level cannot
spenddown to the special income level and be eligible under the § 435.217 group.

When the § 435.217 group is included in the waiver, Appendix B-5 (Post-Eligibility Treatment of
Income) also needs to be completed.
CMS Review Criteria
The eligibility groups served in the waiver are included in the state plan.
Appendix B-5: Post-Eligibility Treatment of Income
Overview
In this Appendix, state policies are detailed concerning the post-eligibility treatment of income of
waiver participants who are eligible under 42 CFR § 435.217.
As of January 1, 2014, and extending through September 30, 2027 (or other date as required by
law), states must apply the eligibility and post-eligibility methodologies described in section
1924 of the Act (the spousal impoverishment statute) to all married individuals seeking
eligibility under the category described at 42 CFR § 435.217. This requirement applies to all
new 1915(c) waivers. As part of any renewal or amendment to a state’s 1915(c) waiver, a state
should, if necessary, modify the terms of its waiver (specifically, in Appendix B-5) to conform
its provisions to section 1924 if the § 435.217 category is covered under the waiver. See
instructions for Appendices B-5-a, B-5-e, B-5-f, and B-5-g.
Post-Eligibility Treatment of Income: Overview
All waiver participants who are eligible under 42 CFR § 435.217 (the special home and
community-based services waiver eligibility group) (as described in the instructions for
Appendix B-4) are subject to post-eligibility calculations. Eligibility and post-eligibility are two
separate and distinct processes with two separate calculations. Eligibility determines whether a
person may be served in the waiver and is conducted in conjunction with entrance to the waiver.
Post-eligibility determines the amount (if any) by which Medicaid reduces its payment for
services that are furnished to an individual in the § 435.217 group. By doing so, post-eligibility
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determines the amount (if any) for which an individual is liable to pay for the cost of waiver
services. Post-eligibility is conducted ONLY for waiver participants in the § 435.217 group.
Waiver participants who are eligible for Medicaid under “community rules” (e.g., SSI
beneficiaries) are not subject to post-eligibility.
Post-eligibility calculations are affected as specified in Appendix B-4 by federal regulations
depending on whether the state is a Section 1634 State or an SSI-Criteria State (42 CFR §
435.726), or a section 209(b) state (42 CFR § 435.735). These regulations are included in
Attachment C to the instructions. The post-eligibility calculations also may be affected by
whether “spousal impoverishment rules” are used to determine the eligibility of a waiver
participant with a community spouse. For the period beginning January 1, 2014, and extending
through September 30, 2027 (or other date as required by law), states must use spousal
impoverishment rules.
Allowances
Post-eligibility calculations arrive at the amount that the waiver participant is liable to pay for the
cost of waiver services by deducting from the person’s income four types of allowances:
•

Allowance for the needs of the waiver participant. This allowance also is referred to as
the “maintenance needs” allowance. This is the amount of income from which the
participant will provide for her/his everyday living expenses (e.g., rent, food, and other
living expenses). As provided in 42 CFR § 435.726(c)(1)(i) and § 735(c)(1)(i), the state
must provide for a maintenance allowance that is based on a reasonable assessment of the
individual’s needs in the community. As provided in section 1915(c)(3), a state may
establish the maintenance allowance for the participant at any level the state chooses so
long as it is based on a reasonable assessment of individual needs. Different maintenance
allowances may be established for individuals or for groups of individuals, based on an
assessment of the individual’s or the group's particular needs. The amount(s) established
must be sufficient to provide for a participant’s shelter, food and other routine expenses. In
the case of waiver participants with a community spouse whose eligibility is determined
using spousal impoverishment rules (under section 1924 of the Act), the state may provide
for a different maintenance allowance than participants who do not have a community
spouse (see Item B-5-d). However, if this amount is different from the amount protected
for the individual’s maintenance allowance under 42 CFR § 435.726 or §435.735, the state
must explain why it believes the amount is reasonable to meet the individual’s maintenance
needs in the community.

•

Allowance for a Spouse. Under regular post-eligibility rules, if the individual lives with
his or her spouse or if the individual is living in the community and the spouse is living at
the individual’s home, the state must protect an additional amount for the spouse's
maintenance. This allowance cannot exceed the highest of the SSI standard, the Optional
State Supplement standard or the Medically Needy Income standard. The state may choose
which standard to apply. If the individual's spouse is not living in the individual's home, no
maintenance amount is protected for the spouse's needs. Under spousal impoverishment
post-eligibility, a community spouse is defined as a spouse who is not living in a medical
institution or nursing facility. For the period beginning January 1, 2014 and extending
through September 30, 2027 (or other date as required by law), states must use spousal
impoverishment rules.
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•

Allowance for a Family: Under regular post-eligibility rules, if other family members live
with the individual, an additional amount is protected for their needs. This amount is
limited by the AFDC need standard for a family of the same size or by the appropriate
medically needy income standard for a family of the same size. The state may choose
which standard to apply.

•

Medical and Remedial Care Expenses: Medical and remedial care expenses are specified
in 42 CFR § 435.726, § 435.735 and section 1924 of the Act. Under the post eligibility
process, which is specified at section 1902(r)(1) of the Social Security Act, states must
deduct from an individual’s income: (a) health insurance premiums, deductibles and coinsurance charges (including Medicaid co-payments) and (b) amounts incurred for
necessary medical and remedial care expenses that are not subject to payment by a third
party and which are recognized under state law but not covered under the state plan. With
respect to the deduction of incurred remedial and medical care expenses not covered by
Medicaid, a state may elect to deduct all such expenses or, at its option, establish reasonable
limits on amounts for incurred remedial and medical care expenses not covered by
Medicaid. The individual must currently be liable for the payment for these services in
order for them to be deductible.
For post eligibility purposes, services not covered under a state’s plan are any services not
paid for by Medicaid for that particular individual. These include services listed as covered
services in the state plan, as well as services the plan does not cover. They also include
services the individual received prior to becoming eligible for Medicaid, as well as services
received after becoming eligible.
Medical and remedial care expenses incurred prior to a period of Medicaid eligibility would
be deductible under the post eligibility process, since these expenses were incurred when
the person was ineligible for Medicaid and thus Medicaid did not pay for them. However,
in order for these old expenses to be deducted under the post eligibility process the
individual must be currently obligated to pay for these costs. As noted previously, these and
other incurred medical and remedial expenses are subject to reasonable limits which may be
established by the state Medicaid program. However, those reasonable limits must ensure
that waiver participants are able to use their own funds to purchase necessary medical or
remedial care not covered; i.e., not paid for, by the state plan.
For example, it would be reasonable for a state to provide that only uncovered services
prescribed by a physician may be deducted. It would also be reasonable for states to impose
specific dollar limits for specific services or items, provided that these limits reflect annual
increases in the cost of medical care services and supplies. However, it would not be
reasonable for states to set an overall dollar limit, such as $50 per month, for all noncovered services. Similarly, it would not be reasonable for states to impose a limit on the
total number of medically necessary services or items that an individual could deduct in any
month.

The amount of a person’s income that remains after providing for the foregoing allowances is the
amount for which the individual is liable for the cost of waiver services.
Miller Trusts
Miller Trusts (also known as Qualifying Income trusts) are exempt from being treated under the
normal Medicaid Trust rules. The exemption allows individuals with excess income to exclude
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that income from being counted for eligibility purposes by placing it in a Miller Trust. Miller
Trusts apply only in certain states; i.e., those states that provide Medicaid nursing facility
services to individuals eligible under the special income limit group, but do not pay for such
services for the medically needy. However, the use of Miller Trusts is not limited to individuals
needing Medicaid for nursing facility services. Miller Trusts also apply to individuals receiving
HCBS waiver services.
While income placed in a Miller Trust is not counted in determining an individual’s Medicaid
eligibility, it still meets the SSI definition of “income”. Therefore, the income placed in the
Trust is included when determining the amount of an individual’s total income for post eligibility
calculation purposes. Specifically, the state calculates the amount of the individual’s total
income, including income placed in the Miller trust, and then makes the required deductions
(maintenance allowance for the waiver participant, spouse and family allowance, and an
allowance for medical and remedial care services) under the post eligibility process. Any
income remaining after the required deductions is applied to the cost of HCBS waiver services.
Many states have set their maintenance allowance for the waiver participant at 300 percent of the
SSI Federal Benefit Rate (FBR), effectively protecting all of the individual’s income for his or
her own use. However, if the individual has a Miller trust the income placed in the trust, when
combined with his or her other income, may result in total income that exceeds a state’s
maintenance allowance. In that case, the individual’s income up to 300 percent of the SSI FBR
would still be protected. But any income in excess of 300 percent would be used in determining
the patient liability under post eligibility.
To calculate the amount of the patient liability, the state would start with the amount of income
that exceeds the state’s maintenance allowance for the waiver participant, and then make the
required deductions for a spouse and family members, and for medical and remedial care
services. Any remaining income is applied to the cost of waiver services.
States may also increase the maintenance needs allowance for waiver participants above 300
percent of the SSI/FBR and protect all of the individual’s income (including the income that is
placed in the Miller trust). In this case, we suggest the state use the following language when
specifying the maintenance needs allowance for individuals in the special home and communitybased waiver eligibility group, “The maintenance needs allowance is equal to the individual’s
total income as determined under the post eligibility process which includes income that is
placed in a Miller trust.
In summary, if the state recognizes Miller trusts, under the post-eligibility process for individuals
in the special home and community-based waiver group, the state has two options:
•
•

Protect amounts of income for the waiver participant’s maintenance needs and
allowances for his/her spouse, family members, and remedial and medical care not
covered by Medicaid, as described above; or
Increase the amount of the waiver participant’s maintenance allowance, as described
above.”

General Guidance Concerning Completing Appendix B-5
Whenever a waiver covers the § 435.217 group, Item B-5-a must be completed. The web-based
application has been designed so that only the items a state must complete will appear, based on
the selection made in Item B-4-a (whether a state is a section 1634, SSI Criteria or 209(b) state)
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and Item B-5-a (whether a state uses spousal eligibility rules and applies spousal post eligibility
rules).
Items B-5-b, B-5-c, and B-5-d apply for time periods after September 30, 2027 (or other date as
required by law).
Section 1634 and SSI criteria states must complete Item B-5-b; Section 209(b) states must
complete Item B-5-c if regular post-eligibility rules are applied. Item B-5-d is completed when a
state employs spousal impoverishment rules under section 1924 of the Act to determine the
eligibility of individuals with a community spouse and also elects to use spousal post-eligibility
rules as provided in section 1924. When a state elects to use spousal post-eligibility rules, the
allowance for the personal needs of the individual that is provided in Item B-5-d takes the place
of the allowance for the individual under Item B-5-b or B-5-c when the individual has a
community spouse. Item B-5-d does not apply when a state does not elect to use spousal
impoverishment rules to determine the eligibility of individuals with a community spouse or
when a state elects to use spousal impoverishment rules to determine eligibility but decides not
to use spousal impoverishment post-eligibility rules. If this is the case, then Item B-5-d does not
apply. Once a state elects to use spousal impoverishment post-eligibility rules, it must apply
these rules to all waiver participants who have a community spouse. The state applies regular
post-eligibility rules to waiver participants who do not have a community spouse.
Items B-5-e, B-5-f, and B-5-g apply for the period beginning January 1, 2014, and extending
through September 30, 2027 (or other date as required by law), when states must use spousal
impoverishment rules whenever a waiver covers the §435.217 group. If the state indicates in
Item B-5-a that it uses spousal impoverishment rules when they are not required, entry of B-5-e,
B-5-f, and B-5-g is not required. The entries in Item B-5-b-2 or B-5-c and in Item B-5-d will
apply. Otherwise, section 1634 and SSI criteria states must complete Item B-5-e and section
209(b) states must complete Item B-5-f. All states must complete Item B-5-g whenever a waiver
covers the § 435.217 group for the period beginning January 1, 2014, and extending through
September 30, 2027 (or other date as required by law).
Detailed Instructions for Completing Appendix B-5
Item B-5-a: Use of Spousal Impoverishment Rules
Instructions
If the waiver is effective during the period beginning January 1, 2014, and extending through
September 30, 2027 (or other date as required by law), the state must check the first box in this
section. This box indicates that spousal impoverishment rules under section 924 of the Act are
used to determine the eligibility of individuals with a community spouse for the § 435.217 group.
If the waiver is effective during a time period before January 1, 2014, or after September 30,
2027 (or other date as required by law), select whether spousal impoverishment rules are used to
determine eligibility. If such rules are employed, also select whether the state elects to apply
spousal post-eligibility rules. When spousal impoverishment eligibility rules are not used to
determine eligibility or when spousal eligibility rules are used to determine eligibility but the
state does not elect to apply spousal post-eligibility rules, complete Item B-5-b-1 or B-5-c-1 in
the next section of the Appendix. When spousal impoverishment eligibility rules are used to
determine eligibility and spousal post-eligibility rules are applied, proceed to the second section
of the Appendix and complete Item B-5-b or B-5-c and Item B-5-d.
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Technical Guidance
This item requires specifying whether spousal impoverishment rules are used to determine the
eligibility of individuals in the § 435.217 group. When a person who is eligible as a member of a
§ 435.217 group and has a community spouse, the state treats the individual as if he or she is
institutionalized. This permit applying the spousal impoverishment post eligibility rules of
section 1924 of the Act (protection against spousal impoverishment) instead of the regular posteligibility rules under 42 CFR § 435.726 and § 435.735 to waiver participants with a community
spouse. The section 1924 post-eligibility rules provide for a more generous community spouse
and family allowance than the rules under 42 CFR § 435.726 and §435.735. Spousal
impoverishment post-eligibility rules can only be used if the state uses spousal impoverishment
eligibility rules. The response to this item affects whether a state completes Items B-5-d, B-5-e,
B-5-f, and B-5-g.
CMS Review Criteria
The state has specified that it uses spousal impoverishment rules under section 1924 of the Act
if the waiver is effective at any time between January 1, 2014, and September 30, 2027 (or
other date as required by law) and the state furnishes waiver services to individuals in the
special home and community-based waiver group under 42 CFR § 435.217.
Item B-5-b: Regular Post-Eligibility Treatment of Income: Section 1634 and SSI Criteria
State
Instructions
This item pertains to section 1634 and SSI Criteria States. Based on the response to Item B-5-a,
complete Item B-5-b.
Technical Guidance
The entries in this item apply only for the time periods after September 30, 2027 (or other date as
required by law). However, this item must be completed for all waivers in section 1634 or SSI
Criteria States, as indicated in Item B-4-a in Appendix B-4. The rules governing post-eligibility
treatment of income in section 1634 and SSI criteria states are located at 42 CFR § 435.726 (see
Attachment C). All parts of the item must be completed. Under each part of the item (i-iii),
select only one of the pre-specified choices. In the case of the allowance for the needs of an
individual, the allowance may be based on a standard contained in the state plan (e.g., SSI
standard) or spelling out another basis for the allowance. There is no ceiling on the amount of
this allowance. States have latitude in establishing the maintenance allowance for the individual.
As discussed previously, the amount of the allowance may vary depending on the needs of the
individual or groups of individuals.
With respect to the allowances for the community spouse and the participant’s family, the
choices available are defined under the provisions of 42 CFR § 435.726. Select one of the
choices specified for the community spouse and the family. With respect to incurred medical and
remedial care expenses, indicate whether the state deducts all such expenses or imposes a
reasonable limit on the amount that may be deducted and specify the nature of the limit.
If the amount protected for the individual’s maintenance allowance is equal to or greater than the
amount calculated as the individual’s total income under the post eligibility process, select the
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“not applicable” choice under the allowance for a spouse and a family. If the state is a Miller
Trust State, see the preceding discussion of Miller Trusts.
When a state uses spousal impoverishment rules to determine eligibility and elects to use spousal
post-eligibility rules, the state still must address post-eligibility treatment of income in the case
of waiver participants who do not have a spouse by completing Item B-5-b-2. Item B-5-b-2
provides for specifying an allowance for a spouse who does not meet the definition of a
community spouse under the provisions of section 1924 of the Act. As a general matter, such an
allowance is not provided because spousal post-eligibility rules will apply and the “not
applicable” choice should be selected. If, however, the state provides for such an allowance, it
must specify the circumstances when an allowance for a spouse will be made under regular posteligibility rules. CMS will review these circumstances to determine whether such an allowance
may be made. Spousal post-eligibility rules must be used in all instances to which they apply. A
state may not provide for the use of alternative rules to its spousal post-eligibility rules.
Item B-5-c: Regular Post-Eligibility Treatment of Income: Section 209(b) State
Instructions
This item pertain to section 209(b) states. Based on the response to Item B-5-a, complete Item
B-5-c.
Technical Guidance
The entries in this item apply only for the time periods after September 30, 2027 (or other date as
required by law). However, this item must be completed for all waivers in §209(b) states. Each
item parallels the corresponding item for section 1634 and SSI criteria states, but some of the
choices differ, based on the requirements in 42 CFR § 435.735 which govern post-eligibility in
section 209(b) states. See the technical guidance for Item B-5-b.
Item B-5-d: Post-Eligibility Treatment of Income Using Spousal Impoverishment Rules
Instructions
This item must be completed whenever a state uses spousal impoverishment rules to determine
eligibility and elects to apply spousal post-eligibility rules.
Technical Guidance
In this item, the state establishes the post-eligibility rules that it will apply to waiver participants
for whom eligibility has been determined using spousal impoverishment rules, provided that the
state also has elected to apply spousal post-eligibility rules. In the case of individuals who do not
have a community spouse as defined in section 1924 of the Act, regular post-eligibility rules (as
specified in Item B-5-b or Item B-5-c) apply.
The spousal impoverishment post-eligibility rules provide for a more generous community
spouse and family allowance than the rules under 42 CFR § 435.726 and 42 CFR § 435.735.
The spousal protection rules also provide for a personal needs allowance (PNA) described in
section 1902(q)(1) of the Act for the needs of the institutionalized individual. This allowance is
a "reasonable amount for clothes and other personal needs of the individual...while in an
institution." For an institutionalized individual, this may be as low as $30 per month. However,
unlike the institutionalized individual whose room and board are covered under Medicaid, the
personal needs of a waiver participant must include a reasonable amount for food, shelter,

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clothing and other customary living expenses. The minimum monthly PNA is not sufficient to
meet these needs when the individual lives in the community.
Therefore, states that elect to serve HCBS waiver participants with community spouses under the
section 1924 spousal rules must use as the personal needs allowance either the maintenance
amount which the state has elected under 42 CFR § 435.726 or 42 CFR § 435.735 (as
appropriate), or an amount that the state can demonstrate is a reasonable amount to cover the
individual's maintenance needs in the community. If the PNA amount differs from the amount
specified for the individual under regular post-eligibility rules, explain in Item B-5-d-ii why this
amount is reasonable to meet the needs of the participant. Also, specify the state’s policies with
respect to the deduction of incurred expenses for necessary medical and remedial care not
covered under the state plan.
Item B-5-e: Regular Post-Eligibility Treatment of Income: Section 1634 and SSI Criteria
State
Instructions
Complete the item if required based on Item B-4-a and Item B-5-a. See General Guidance
Concerning Completing Appendix B-5.
Technical Guidance
The entries in this item apply only for the period starting January 1, 2014 and extending through
September 30, 2027 (or other date as required by law). This item applies to waivers in section
1634 or SSI Criteria States, as indicated in Item B-4-a in Appendix B-4. The rules governing
post-eligibility treatment of income in section 1634 and SSI criteria states are located at 42 CFR
§ 435.726 (see Attachment C). All parts of the item must be completed. Under each part of the
item (i-iii), select only one of the pre-specified choices. In the case of the allowance for the
needs of an individual, the allowance may be based on a standard contained in the state plan
(e.g., SSI standard) or spelling out another basis for the allowance. There is no ceiling on the
amount of this allowance. States have latitude in establishing the maintenance allowance for the
individual. As discussed previously, the amount of the allowance may vary depending on the
needs of the individual or groups of individuals.
With respect to the allowances for the community spouse and the participant’s family, the
choices available are defined under the provisions of 42 CFR § 435.726. Select one of the
choices specified for the community spouse and the family. With respect to incurred medical
and remedial care expenses, indicate whether the state deducts all such expenses or imposes a
reasonable limit on the amount that may be deducted and specify the nature of the limit.
If the amount protected for the individual’s maintenance allowance is equal to or greater than the
amount calculated as the individual’s total income under the post eligibility process, select the
“not applicable” choice under the allowance for a spouse and a family. If the state is a Miller
Trust State, see the preceding discussion of Miller Trusts.
Even though the state must use spousal impoverishment rules to determine eligibility and must
use spousal post-eligibility rules, the state still must address post-eligibility treatment of income
in the case of waiver participants who do not have a spouse. Item B-5-e provides for specifying
an allowance for a spouse who does not meet the definition of a community spouse under the
provisions of section 1924 of the Act. As a general matter, such an allowance is not provided
because spousal post-eligibility rules will apply and the “not applicable” choice should be
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selected. If, however, the state provides for such an allowance, it must specify the circumstances
when an allowance for a spouse will be made under regular post-eligibility rules. CMS will
review these circumstances to determine whether such an allowance may be made. Spousal
post-eligibility rules must be used in all instances to which they apply. A state may not provide
for the use of alternative rules to its spousal post-eligibility rules.
Item B-5-f: Regular Post-Eligibility Treatment of Income: Section 209(b) State
Instructions
Complete the item if required based on Item B-4-a and Item B-5-a. See General Guidance
Concerning Completing Appendix B-5.
Technical Guidance
The entries in this item apply only for the period starting January 1, 2014, and extending through
September 30, 2027 (or other date as required by law). This item applies to waivers in section
209(b) states, as indicated in Item B-4-a in Appendix B-4. Each item parallels the corresponding
item for §section 1634 and SSI criteria states, but some of the choices differ, based on the
requirements in 42 CFR § 435.735 which govern post-eligibility in section 209(b) states. See the
technical guidance for Item B-5-e.
Item B-5-g: Post-Eligibility Treatment of Income Using Spousal Impoverishment Rules
Instructions
Complete the item if required based on Item B-4-a and Item B-5-a. See General Guidance
Concerning Completing Appendix B-5.
Technical Guidance
The entries in this item apply only for the period starting January 1, 2014, and extending through
September 30, 2027 (or other date as required by law). In this item, the state establishes the
post-eligibility rules that it will apply to waiver participants for whom eligibility has been
determined using spousal impoverishment rules. In the case of individuals who do not have a
community spouse as defined in section 1924 of the Act, regular post-eligibility rules (as
specified in Item B-5-e or Item B-5-f) apply.
The spousal impoverishment post-eligibility rules provide for a more generous community
spouse and family allowance than the rules under 42 CFR § 435.726 and 42 CFR § 435.735.
The spousal protection rules also provide for a personal needs allowance (PNA) described in
§1902(q)(1) of the Act for the needs of the institutionalized individual. This allowance is a
"reasonable amount for clothes and other personal needs of the individual...while in an
institution." For an institutionalized individual, this may be as low as $30 per month. However,
unlike the institutionalized individual whose room and board are covered under Medicaid, the
personal needs of a waiver participant must include a reasonable amount for food, shelter,
clothing and other customary living expenses. The minimum monthly PNA is not sufficient to
meet these needs when the individual lives in the community.
Therefore, states that elect to serve HCBS waiver participants with community spouses under the
section 1924 spousal rules must use as the personal needs allowance either the maintenance
amount which the state has elected under 42 CFR § 435.726 or 42 CFR § 435.735 (as
appropriate), or an amount that the state can demonstrate is a reasonable amount to cover the
individual's maintenance needs in the community. If the PNA amount differs from the amount
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specified for the individual under regular post-eligibility rules, explain in Item B-5-g-ii why this
amount is reasonable to meet the needs of the participant. Also, specify the state’s policies with
respect to the deduction of incurred expenses for necessary medical and remedial care not
covered under the state plan.
Post Eligibility Treatment of Income Under Concurrent Waivers
Technical Guidance
Under the post-eligibility process, the income remaining after the required deductions are taken
can only be applied to the cost of home and community-based waiver services. Excess income
cannot be applied to the cost of regular Medicaid state plan services. This poses a problem in a
capitated system because it is difficult to identify and separate 1915(c) waiver services for each
individual.
Since excess income can only be applied to the cost of 1915(c) waiver services, the state may
elect to use one of the following options regarding the application of excess income under a
capitated system:
•

The state could increase the amount of the waiver participant’s maintenance needs
allowance to an amount equal to or greater than the amount of income an individual can
have and be eligible under 42 CFR § 435.217 (for Miller Trust States this includes
income that is placed in a Miller trust);

•

The state could develop a method to carve out/identify the cost of home and communitybased waiver services from the cost of other Medicaid services so that the individual’s
patient liability is applied only to the cost of home and community-based waiver services;
or

•

The state could use the portion of the capitated payment rate that is attributable to home
and community-based waiver services as the “dollar” amount of waiver services that the
individual is liable for since the capitated portion of the rate that is attributable to home
and community based waiver services is the actual amount that the state pays to the
managed care organization/entity for these services.

If the state elects to increase the maintenance needs allowance for the waiver participant, the
state would provide this information in Appendix B-5, Post Eligibility Treatment of Income
under the allowance for the maintenance needs of the waiver participant under the following
formula, electing the appropriate sections based on the state classification and whether or not the
state is using the spousal impoverishment post eligibility rules.
If the state develops a method to carve out/identify the cost of home and community-based
waiver services from the cost of other Medicaid services so that the individual’s patient liability
is applied only to the cost of home and community-based waiver services, this methodology
should be specified in Appendix B-5 under the allowance for the needs of the waiver participant.
If the state uses capitated payment rate that is attributable to home and community-based waiver
services as the “dollar” amount of waiver services that the individual is liable it must provide an
explanation in Appendix B-5 under the allowance for the needs of the waiver participant that
takes into account the following: Under a capitated system, the “benefit” becomes the amount
the state is expending on behalf of the beneficiary, or the capitated payment and not necessarily
the actual services that the individual receives. Therefore, states can isolate the amount of the
capitation rate that applies to waiver services. When a state develops a capitation rate, factors
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that are used may include geographic area, age, target group, level or intensity of services. Thus,
a state may have more than one capitation payment rate for the cost of home and communitybased waiver services. If a state uses these factors in developing its rate, these amounts could be
used for the amount of the waiver services that an individual uses in determining his/her patient
liability.
CMS Review Criteria (Items B-5-b – B-5-g)
•
•
•
•

The state has completed the appropriate Regular Post Eligibility item, based on the
selections made in Item B-5-a and Item B-4-a in Appendix B-4.
For Regular Post Eligibility, the protected amounts comply with 42 CFR § 435.726 or
42 CFR § 435.735 as applicable.
When the state imposes a limit on the amount of incurred medical or remedial care
expenses that may be deducted, the limit is specified and is reasonable.
For Spousal Impoverishment Post Eligibility, if the personal needs amount differs from
the amount protected under regular post-eligibility rules, there is an explanation as to
why the amount is reasonable to meet the maintenance needs of the waiver participant.

Appendix B-6: Evaluation/Reevaluation of Level of Care
Overview
In Appendix B-6, waiver level of care evaluation and reevaluation processes are specified. Only
individuals who are determined to require an institutional level of care specified for the waiver
may be enrolled in the waiver. The process that is used to make this determination for new
waiver entrants is termed “evaluation.” In accordance with 42 CFR § 441.302(c), the evaluation
must find that there is a reasonable indication that the individual would need services in the
appropriate level of care within the near future (one month or less). The periodic review of a
waiver participant’s condition to verify that the individual continues to require the level of care is
termed “reevaluation.”
In accordance with 42 CFR § 441.302(c), waiver level of care determinations must be consistent
with those made for the appropriate institutional level of care under the state plan. Level of care
is typically assessed using a standardized instrument or form that evaluates and re-evaluates an
individual’s need for the level of care. Most commonly, states utilize the same level of care
evaluation instrument and procedures for the waiver as are used for hospital, NF, or ICF/IID
services, as applicable. When an individual is determined not to require a level of care specified
in the waiver, the person must be afforded the opportunity to request a Fair Hearing as provided
in Appendix F-1.
Detailed Instructions for Completing Appendix B-6
Item B-6-a: Reasonable Indication of Need for Services
Instructions
Specify: (a) the minimum number of services (at least one) that an individual must require in
order to be determined to need waiver services and (b) the minimum frequency services must be
needed - at least monthly or require monthly monitoring when services are furnished on less than
a monthly basis. The state may establish a minimum frequency, other than monthly, that a
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participant must require services in order to be determined to need waiver services or require
monthly monitoring when services are furnished on less than a monthly basis.
Technical Guidance
In order for an individual to be considered to require a level of care specified for the waiver, the
person should: (a) require at least one waiver service (as evidenced by the service plan) and (b)
require the provision of waiver services at least monthly or, if less frequently, requires monthly
monitoring (as documented in the service plan) to assure health and welfare. Individuals may
not be enrolled in a waiver for the sole purpose of enabling them to secure Medicaid eligibility as
members of the § 435.217 group. Entrance to the waiver is contingent on a person’s requiring
one or more of the services offered in the waiver in order to avoid institutionalization.
The need for the level of care specified for the waiver is demonstrated by the individual’s
needing one or more of the services offered by the waiver and the need to receive such services
at least monthly. When services are not required on at least a monthly basis, the need for the
level of care may instead be based on the need for at least monthly monitoring of the person’s
health and welfare and include periodic “face-to-face” monitoring of the health and welfare of
the participant. This monitoring needs to be consistent with the monitoring procedures as
specified in Appendix D-2 of the application. Such monitoring may be conducted through the
waiver or through another means (e.g., targeted case management). The need for monitoring
must be specified in the person’s service plan and its performance recorded in the waiver record.
Post-entrance to the waiver, when a waiver participant is found not to be utilizing any waiver
services for an extended period, the state should conduct a re-evaluation of level-of-care to
reassess the need for waiver services.
CMS Review Criteria
The waiver specifies that:
• An individual must require at least one waiver service.
•

An individual must require the provision of waiver services monthly or other minimum
frequency as established by the state or, if less frequently than monthly, require monthly
monitoring to assure health and welfare.

Item B-6-b: Responsibility for Performing Evaluations and Reevaluations
Instructions
Select the agency that performs evaluations and reevaluations of level of care (i.e., the agency
that makes the level of care determination).
Technical Guidance
The determination that an individual requires a level of care specified in the waiver may be made
directly by the Medicaid agency or another entity that has been designated by the Medicaid
agency. In the case of the latter, the Medicaid agency must oversee the performance of the other
entity, including ensuring that applicable level of care criteria have been properly applied, and
should describe this in Appendix A of the waiver application.

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When a different agency performs the initial evaluation of level of care and reevaluations, select
the “other” choice and specify the agency that performs the initial evaluation and the agency that
performs the reevaluation.
This item focuses on the agency that makes the level of care determination. Other entities (e.g.,
case management providers) may be responsible for performing assessments, gathering the
information that is necessary to make this determination and submitting this information to the
state for the level of care waiver eligibility determination. Do not include such entities in the
response to this item. The role that such entities play in the level of care process may be
described in Item B-6-f. Pre-entrance activities associated with the initial evaluation of level of
care may not be claimed as a waiver service since federal financial participation (FFP) for waiver
services may only be claimed once a person has entered the waiver. The expenses for conducting
such activities may be claimed as an administrative expense or, if provided in the state plan,
under the coverage of targeted case management services. Please note that administrative costs,
necessary for the efficient administration of the Medicaid state Plan, must be in accordance with
the CMS approved Medicaid cost allocation plan. Cost allocation plans are not approved via
approval of the HCBS waiver application.
CMS Review Criteria
The agency that performs evaluations and reevaluations of level of care is described
sufficiently in the waiver application.
Item B-6-c: Qualifications of Individuals Performing Initial Evaluation
Instructions
In the text field, specify the educational/professional qualifications of individuals who perform
the initial evaluation of level of care for waiver applicants.
Technical Guidance
42 CFR § 441.303(c)(1) requires that the waiver specify the credentials (minimum
qualifications) of level of care evaluators. The state has latitude in determining these credentials.
However, the qualifications should be appropriate for the waiver’s target population. Examples
might include a physician, registered nurse, licensed social worker, or qualified developmental
disability professional. The qualifications of individuals who perform re-evaluations are
specified in Item B-6-h.
CMS Review Criteria
The specified qualifications of evaluators are appropriate to the target groups specified in the
waiver.
Item B-6-d: Level of Care Criteria
Instructions
In the text field, fully specify the level of care criteria that are used to evaluate and reevaluate
whether an individual needs services through the waiver and that serve as the basis of the state’s
level of care instrument/tool. Specify the level of care instrument/tool that is employed.

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Technical Guidance
In this item specify the criteria that are used to evaluate/re-evaluate level of care. The
description of the criteria should identify the factors that are assessed in evaluating level of care
and the scoring system (if applicable) that is employed to determine level of care. Do not
“paste” an instrument/tool or applicable protocols or regulations into the “text field” (when the
web-based application is used, any material that is pasted into a text field will lose its underlying
formatting). In addition to the full level of care criteria, the response may also include citations
of applicable state laws, regulations, and policies. When such citations are made, CMS expects
that the documents will be made available through the Medicaid agency or the operating agency
(if applicable) to CMS upon request. Also specify the instruments/tools that are used (e.g., by
referencing the name of the instrument or form or the name of the automated system).
States should keep in mind that the ICF/IID level of care instrument for waiver or institution
should not limit participation to those with certain conditions but instead should encompass
persons with intellectual disability and related conditions, as provided in 42 CFR § 435.1009.
(See discussion in section B-1-a). Waiver participation may be limited to individuals with
certain conditions (e.g., autism), but those conditions must be explicitly specified in Appendix B1-b, not embedded in a level of care evaluation.
When ICF/IID level of care is evaluated, it is not required that a physician recommend, certify,
or verify that the individual should receive the level of care furnished through the waiver.
Similarly, a physician certification or recommendation is not required for nursing facility level of
care.
CMS Review Criteria
• The factors used to evaluate and re-evaluate level of care are consistent with and relevant
to the level(s) of care specified for the waiver.
• ICF IID level of care is consistent with 42 CFR § 435.1009, persons with IID or related
conditions. The level of care evaluation tool is functional and does not limit participation
to individuals with certain conditions.
Item B-6-e: Level of Care Instrument(s)
Instructions
Select whether the instrument/tool that is used to evaluate level of care for the waiver differs
from the instrument/tool used to evaluate institutional level of care. If the tools are different,
furnish the information specified.
Technical Guidance
When the waiver level of care instrument/tool differs from the instrument/tool used to determine
institutional level-of-care, 42 CFR § 441.303(c)(1) requires the state to describe how and why
they differ and explain how the outcome of the level of care determination under the waiver is
reliable, valid, and fully comparable to the outcome for institutional evaluation. In particular, the
state must be able to demonstrate that individuals who meet level of care via the application of
the waiver instrument also would meet level of care when the institutional instrument is
employed. Usually, states employ the same instrument/tool to evaluate level of care for the
waiver and institutional services.

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CMS Review Criteria
The waiver documents and provides evidence that when a different level of care instrument/tool
is used for the waiver and institutional services, the outcomes of the evaluations are equivalent.
Item B-6-f: Process for Level of Care Evaluation/ Reevaluation
Instructions
In the text field, describe the process for evaluating waiver applicants for their need for the level
of care under the waiver. If the reevaluation process differs from the evaluation process, describe
the differences.
Technical Guidance
The description of the process to evaluate/reevaluate the need for a level of care specified in the
waiver should include a description of the assessments that are performed and the information
that is gathered as part of the process and who is responsible for performing or arranging for
these assessments or obtaining the necessary additional information. The process used for the reevaluation of level of care does need not exactly match the process used for the initial evaluation
of level of care, although the level of care criteria that are applied must be the same. For
example, it may be necessary to obtain a psychological assessment to determine that a person
who has applied for services in a developmental disabilities waiver program has intellectual
disability. However, a state need not require that such an assessment be performed as part of reevaluation once the person’s diagnosis of intellectual disability has been confirmed. For reevaluation, a state’s criteria may take into consideration the needs of the individual without the
support provided through the waiver. When the re-evaluation process differs from the initial
evaluation process, it must be sufficient to confirm that the person continues to require the level
of care specified in the waiver, including the continuing need for the provision of waiver
services. A state may not provide for the presumptive continuation of an individual on the
waiver. The re-evaluation process must provide for an affirmative finding that the individual
continues to require the level of care.
CMS Review Criteria
• The waiver describes the types of assessments and information that is used in support of
the determination of level of care and who is responsible for ensuring that this information
is obtained.
• When the re-evaluation process differs from the evaluation process, appropriate
information is gathered to confirm that the waiver participant continues to require a level
of care specified in the waiver.
Item B-6-g: Re-evaluation Schedule
Instructions
Select the minimum frequency for the performance of level of care re-evaluation.
Technical Guidance
42 CFR §441.303(c)(4) requires that the state specify how often level of care re-evaluations are
performed. In response to this item, specify the minimum frequency for the performance of level
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evaluation of level of care may be performed at any time due to a change in a person’s condition
or service needs.
CMS Review Criteria
The waiver specifies that level of care will be re-evaluated at least annually.
Item B-6-h: Qualifications of Individuals Who Perform Re-evaluations
Instructions
Select whether the qualifications of individuals who perform level of care re-evaluations are the
same as the qualifications of the persons who perform initial evaluations. If the qualifications
are different, specify the qualifications of individuals who perform re-evaluations in the text
field.
Technical Guidance
Individuals who may perform re-evaluations need not have the same qualifications as persons
who perform initial evaluations. For example, a state may require that a physician perform the
initial evaluation but permit a nurse to perform the re-evaluation. The qualifications should be
appropriate for the waiver’s target population.
CMS Review Criteria
The qualifications of individuals who perform re-evaluations are appropriate for the target
groups specified in the waiver.
Item B-6-i: Procedures to Ensure Timely Re-Evaluations
Instructions
In the text field, specify the procedures that are used to ensure timely re-evaluations of level of
care.
Technical Guidance
The regulation at 42 CFR § 441.303(c)(4) requires that the state specify its procedures to ensure
that the level of care re-evaluations is performed on a timely basis. Timely re-evaluation means
that the re-evaluation is completed prior to the end date of the previous evaluation to prevent a
break in the continuity of a participant’s services. Eligibility for waiver services hinges on the
determination of the need for a level of care specified in the waiver. If a re-evaluation is not
performed timely, it may have an adverse impact on the participant. In addition, the state will
not be able to claim FFP for the services furnished to the participant until waiver eligibility is
restored and may not claim FFP for services delivered during the period in which level of care
has lapsed. Examples of possible procedures include the use of tickler files, edits in computer
systems, or components parts of case management.
CMS Review Criteria
The procedures specified ensure that re-evaluations will be performed on a timely basis.

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Item B-6-j: Maintenance of Evaluation/Reevaluation Records
Instructions
In the text field, specify the location(s) where records of evaluations and reevaluations of level of
care are maintained.
Technical Guidance
Records of waiver participant evaluations and re-evaluations must be kept in written (printed) or
electronically retrievable form for a minimum period of three years after the end of the waiver
year when the evaluation or re-evaluation was performed. State law may dictate that these
records be kept for a longer period. These records must be readily retrievable, including when
requested by CMS. As provided in 42 CFR § 441.303(c)(3), the location(s) where records of
evaluations and reevaluations of level of care are maintained must be specified in the waiver.
Records may be maintained at the Medicaid agency, the operating agency (if applicable), in case
manager records, and/or in other locations (e.g., waiver provider offices). It is advisable that a
set of records be maintained by a state agency (or, if applicable, by a state contractor) rather than
only locally in order to ensure that the records are retrievable.
Quality Improvement: Level of Care (LOC) Determination
The state demonstrates that it implements the processes and instrument(s) specified in its
approved waiver for evaluating/re-evaluating and applicant’s/waiver participant’s level of
care consistent with care provided in a hospital, NF, or ICF/IID.
An evaluation for LOC is provided to all applicants for whom there is reasonable
indication that services may be needed in the future.
The processes and instruments described in the approved waiver are applied appropriately
and according to the approved description to determine participant LOC.
Instructions
The QIS must describe how the state Medicaid Agency will determine that each waiver
assurance (and its associated component elements) is met. The waiver assurance and component
elements are listed above. For each component element, this description must include:
•

•

The entity or entities responsible for reviewing the results (data and information) of
discovery and remediation activities to determine whether the performance of the system
reflects compliance with the assurances; and,

•

The frequency at which system performance is measured.

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Technical Guidance
This QIS element focuses on discovery and remediation activities, that is, processes to assess,
review, evaluate or otherwise analyze a program, process, operation, or outcome. Specifically,
the evidence produced as a result of discovery and remediation activities should provide a clear
picture of the state’s compliance in meeting an assurance.
CMS Review Criteria
The discovery of compliance with this assurance and the remediation of identified problems
must address how the Medicaid agency assures compliance with the following level of care
sub-assurances:
•
•
•
•
•

An evaluation for LOC is provided to all applicants for whom there is reasonable
indication that services may be needed in the future.
The LOC of enrolled participants are reevaluated at least annually or as specified in the
approved waiver.
The processes and instruments described in the approved waiver are applied
appropriately and according to the approved description to determine participant LOC;
How frequently oversight is conducted; and
The entity (or entities) responsible for the discovery and remediation activities.

Appendix B-7: Freedom of Choice
Overview
As provided in section 1915(c)(2)(C) of the Act and 42 CFR § 441.302(d), individuals have
freedom of choice in the selection of home and community-based services or institutional
services. The individual’s choice must be documented during entrance into the waiver program.
When an individual is not given freedom of choice of institutional or home and communitybased services, the person must be afforded the opportunity to request a Fair Hearing as provided
in Appendix F-1.
A state must inform the person of the feasible alternatives under the waiver so that the individual
(or the person’s legal representative) can make an informed choice. Feasible alternatives may
only be determined after the assessment of an individual's needs and an evaluation of level of
care. Feasible alternatives mean the types of waiver services that would be available to the
individual to address the person’s assessed needs, subject to the development of the person’s
service plan. It is not expected that an individual will be offered entrance to the waiver unless
the assessment indicates that person’s needs (including assuring the person’s health and welfare)
can be met through the provision of waiver services in combination with state plan, other formal
and informal supports, and appropriate safeguards. Appropriate safeguards may include ensuring
that the individual is informed of alternatives and risks and responsibilities, as evidenced, for
example, by the execution of a risk agreement (see Appendix D-1). In this Appendix, the
process by which individuals are afforded freedom of choice is specified.

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Detailed Instructions for Completing Appendix B-7
Item B-7-a: Procedures
Instructions
In the text field, describe the procedures that are followed to inform the individual (or the
person’s legal representative) of the feasible alternatives under the waiver and to document the
individual’s choice of home and community-based services or institutional services.
Technical Guidance
The regulation at 42 CFR § 441.303(d) requires that the waiver describe how eligible individuals
are informed of the feasible alternatives available under the waiver and how such individuals are
permitted to choose either institutional services or home and community-based services. In
addition to describing the procedures for how these activities are performed, the description also
should identify the entity or individual responsible for performing these activities. The
procedures should include ensuring that the individual (or the individual’s legal representative)
exercises an informed choice. This may entail orally explaining the feasible alternatives and the
right to exercise freedom of choice or communicating with the individual through alternative
means. A record must be established that documents the individual’s choice. Include in the
description the name of the form/document that is used to document that the person has been
informed of feasible alternatives and has been permitted to choose between waiver and
institutional services.
CMS Review Criteria
• The procedures described ensure that individuals are provided information about the
services that are available under the waiver and that they have the choice of institutional
or home and community-based services prior to the enrollment into the waiver program.
• The waiver identifies the entity or individual responsible for providing information about
feasible alternatives and informing the individual, or their legal representative, about their
freedom of choice between waiver and institutional services.
Item B-7-b: Maintenance of Forms
Instructions
In the text field, specify the locations where copies of the forms that document that the
participant has been informed of feasible alternatives and has exercised choice in the selection of
waiver or institutional services are maintained.
Technical Guidance
States are not required to submit copies of the form that documents that an individual has been
informed of the feasible alternatives under the waiver and has exercised freedom of choice in the
selection of waiver or institutional services. However, the form (or forms) identified in Item B7-c must be available from the Medicaid agency or the operating agency (if applicable) to CMS
upon request.
The requirements for maintaining records concerning freedom of choice are the same as those
that apply to the maintenance of documentation of level of care evaluations and re-evaluations.

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Appendix B-8: Access to Services by Limited English Proficient Persons
Overview
Recipients of federal assistance (including Medicaid) are required to provide oral and written
assistance to persons who are limited English proficient (LEP) to aid them to access and use
services in accordance with 42 CFR § 435.905(b).
Detailed Instructions for Completing Appendix B-8
Instructions
In text field, describe the accommodations that are made for LEP persons who seek waiver
services and post-entrance for LEP waiver participants.
Technical Guidance
Oral and written assistance to LEP persons may take various forms, including hiring bilingual
staff, arranging for interpreters (interpreter services may be offered as a waiver service), and
translating written materials when a significant number or percentage of program beneficiaries
require information in a language other than English.
CMS Review Criteria
A variety of accommodations are described, both in conjunction with the waiver entrance
process and for communicating with LEP persons on an ongoing basis (e.g., by providing for
bilingual case managers).

Appendix C: Participant Services
Brief Overview
Appendix C specifies the services that are provided in the waiver. The Appendix has four
components:
•

Appendix C-1 is a summary listing of the services covered in the waiver;

•

Appendix C-2 contains general service specifications;

•

In Appendix C-3, the specifications of each waiver service are detailed; and,

•

In Appendix C-4, the limitations (if any) that apply to the overall amount of waiver services
are specified.

CMS policies and guidance concerning the coverage of waiver services are discussed in detail in
the instructions for Appendix C-3.
Web-Based Application
The web-based waiver application combines Appendix C-1 and Appendix C-3 into a single
module. In the web-based application, services are added one-by-one and a master list of
services is created that is the equivalent of Appendix C-1. In addition, the web-based application
uses the master list of services to populate the tables in Appendix J-2 that must be completed in
order to calculate Factor D in the cost-neutrality demonstration. In addition, there also are
linkages between the Appendix C-1/C-3 module and Appendix E with respect to waiver services
that may be participant-directed.
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Appendix C-1: Summary of Services Covered
Overview
In Appendix C-1, the services offered under the waiver are listed. Waiver services are
categorized into four types. Each of these services is further specified in Appendix C-3. When
case management is not provided as a waiver service, information also must be provided about
how case management is furnished to waiver participants.
Detailed Instructions for Completing Appendix C-1
Item C-1-a: Waiver Services Summary
Instructions
In the table, indicate whether the waiver includes one or more of the listed statutory services. If
a statutory service has an alternate title, insert the title. Also list the titles of other waiver
services, extended state plan services, and supports for participant direction that are covered in
the waiver (as applicable). See the technical guidance for a discussion of the classification of
waiver services by type. In the web-based application, drop-down menus are used to select and
classify services.
Technical Guidance
This table serves as a master summary list of the services covered in the waiver. A service
specification template (Appendix C-3) must be completed for each service listed in the summary.
In addition, this table serves as the basis for the list of waiver services that are included in the
estimate of the average per capita cost of waiver services in Appendix J-2 of the application.
The table is divided into four parts: (a) services that are specifically authorized or otherwise
included in section 1915(c) of the Act (“statutory services”); (b) “other services” not specified in
the statute for which the state requests the authority to provide under the provisions of 42 CFR
§ 440.180(b)(9); (c) extended state plan services; and (d) supports for participant direction. Each
of these classifications is described as follows:
1. Statutory Services
This table lists each of the services that are specifically authorized or otherwise included in
section 1915(c) of the Act. The core definitions of these services (included in the attachment to
this Appendix) describe the commonly understood scope and nature of each of these services.
Indicate whether the waiver includes these services. The scope of the service (as specified in
Appendix C-3) does not have to exactly match the core service definition. So long as the
specified scope of the service aligns with the core service definition, the service is considered a
statutory service. Similarly, it is not necessary that the title for the service be the same as
statutory title. For example, if the scope of case management services aligns with the core
definition, the waiver is considered to include this service, even though the state may use “care
management” or “support coordination” as its title. When an alternative title is used, enter it in
the text field provided. Also use the alternative title in the service specification template in
Appendix C-3 and in the cost neutrality calculation table in Appendix J.
When case management services are not included as a waiver service, complete Items C-1-b and
C-1-c (if applicable) (see below). Please note that when case management is provided as an
administrative function, administrative costs must be in accordance with the approved cost
allocation plan. Cost allocation plans are not approved via this waiver application.
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2. Other Services
CMS regulation at 42 CFR § 440.180(b)(9) permits a state to request the authority to offer
“other” services that are not expressly authorized in the statute as long as it can be demonstrated
that the service will be necessary to assist a waiver participant to avoid institutionalization and
function in the community. In this part of the table, list the services that are offered in the waiver
that are not statutory services. However, in this list, do not include “extended state plan” or
“supports for participant direction” services, even though they are considered to be types of
“other services.” These services are listed in the next two parts of the table. Some non-statutory
services are included in the core service definitions (e.g., assisted living, personal emergency
response system). However, the core service definitions are by no means inclusive of all the
types of services and supports that states may offer in waivers. Again, if necessary, insert
additional rows into this part of the table to accommodate all the other services offered through
the waiver.
3. Extended State Plan Services
The services included in a waiver must not duplicate services that are provided under the state
plan. However, through a waiver, a state may augment the services that it provides under the
state plan. When a state wants to enhance the amount, duration or frequency of a state plan
service but otherwise the scope of the service is the same as the state plan service, the service is
considered an “extended state plan” service. For example, under a waiver, the number of home
health aide visits that are allowed under the state plan can be augmented. The amount
chargeable as waiver services is the amount incurred after any limits in state plan services are
exhausted. In this part of the table, list any other extended state plan services that are included in
the waiver. In the service specifications for these services, note that the service is covered under
the state plan and describe how the amount, duration or frequency of the service differs from the
state plan. While a waiver service may be similar in scope to a state plan service, it would be
considered an “other” service rather than an extended state Plan service if the service delivery
modality (i.e., availability of participant direction) is different under the waiver.
Services that a state chooses not to cover under their state plan (optional state plan services) but
are included under a waiver, are considered “other” services or statutory services (e.g., personal
care) as the case may be, not extended state plan services. When a service is covered under the
waiver that is similar to but has a different scope and/or uses different types of providers than the
service covered under the state plan, it is considered an “other” service, not an extended state
plan service. A service is not considered to be an extended state plan service if it cannot be
reimbursed in whole or in part under the state plan.
If an extended state plan coverage is proposed in order to provide a service in an amount greater
than permitted under the state plan, the coverage may only apply to adults (individuals age 21
and older). When children are served in a waiver, the services that are included in the waiver
must take into account the Early and Periodic Screening, Diagnostic and Treatment (EPSDT)
benefit requirements. Federal requirements concerning EPSDT mandate that Medicaid eligible
children receive all medically necessary services coverable under section 1905(a) of the Act
regardless of whether such services are specifically included in the state plan. The waiver may
not provide for the coverage of services that could be furnished to children under EPSDT. If a
waiver targets children exclusively, it may not provide for the coverage of any service that can
be offered through the state plan.
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4. Supports for Participant Direction
As discussed in more detail in the instructions for Appendix E, when a state provides the
opportunity for participants to direct some or all of their waiver services, the state must make
available certain supports to waiver participants who do so. These supports include “financial
management services” and “information and assistance” to support waiver participants in
directing and managing their services. The core service definitions include “financial
management services” and “information and assistance in support of participant direction.”
When the waiver provides opportunities for participants to direct some or all of their waiver
services, indicate in this part of the table whether either of these supports (along with any other
supports for participant direction as defined by the state) are covered as waiver services. Please
note that these supports for participant direction do not necessarily have to be provided as a
distinct waiver service (for example, supports for participant direction may be offered in
conjunction with the provision of waiver case management services. Both types of supports also
may be furnished as administrative activities rather than as waiver services. When these
supports are not covered as waiver services, their provision is described in Appendix E.
Section 1915(b)/1915(c) Concurrent Waivers: Section 1915(b)(3) Services. When the HCBS
waiver operates concurrently with a section 1915(b) waiver, the state may have received CMS
approval to offer additional services under the provisions of section 1915(b)(3) of the Act.
Because the provision of such services is authorized under the section 1915(b) waiver authority
rather than the section 1915(c) waiver authority, do not include the additional section 1915(b)(3)
services in the listing of HCBS waiver services. Such services are specified in the section
1915(b) waiver application and subject to separate CMS review and approval. Similarly, when
the section 1915(b) waiver permits managed care entities to use savings in order to provide
alternative services to beneficiaries, do not include such services in the listing of HCBS waiver
services. Also note that any additional services provided to section 1915(c) waiver participants
as part of a capitated arrangement under section 1915(b), are provided without additional cost to
the section 1915(c) waiver — the cost to the section 1915(c) waiver is the capitated rate, whether
or not additional services are provided.
CMS Review Criteria
• Services have been properly classified.
• There is no duplication of state Medicaid plan services.
• Non-statutory (“other”) services are necessary for assisting waiver participants to avoid
institutionalization and function in the community.
Item C-1-b. Alternate Provision of Case Management Services to Waiver Participants
Instructions
Select the payment authority or authorities under which case management functions are
conducted and complete Item C-1-c as applicable, including an indication as to whether case
management is provided as a waiver service. Given that case managers are critical for ensuring
that regulatory requirements for both person-centered planning and HCBS settings are met, states
should describe the training required of case managers on both topics.

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Technical Guidance
In the context of an HCBS waiver, case management usually entails (but is not limited to)
conducting the following functions:
•
•
•
•
•
•
•
•
•
•
•

Evaluation and/or re-evaluation of level of care;
Assessment and/or reassessment of the need for waiver services;
Development and/or review of the service plan;
Coordination of multiple services and/or among multiple providers;
Linking waiver participants to other federal, state and local programs;
Monitoring the implementation of the service plan and participant health and welfare,
Addressing problems in service provision;
Monitoring compliance with HCBS settings criteria;
Reporting and following-up on critical incidents;
Responding to participant crises; and
For waivers with cost or service duration limits, monitoring to detect and resolve
situations when the needs of an individual might exceed the limit(s) to ensure health and
welfare of waiver participants.

Case management may be covered as a waiver service. When case management is covered as a
waiver service, functions that are performed prior to the entrance of an individual to the waiver
(e.g., initial evaluation of level of care) may not be billed as a waiver service (however, they
potentially may be claimed as an administrative expense or billed to 1915(g) state plan Targeted
Case Management or another Medicaid authority).
Case management also may be covered as a state plan service (Targeted Case
Management) under section 1915(g)(1) of the Act, or another Medicaid authority. When
case management is covered as a waiver service, its scope and other information about the
service is described in Appendix C-3. When case management is not covered as a waiver service,
select the payment authority under which waiver case management functions are provided and
complete Item C-1-c. This information assists CMS in understanding the overall structure of the
waiver. In rare instances (e.g., small, highly specialized waiver programs), case management
may not be furnished as a distinct activity but instead is furnished as a component of other
waiver services. If this is the case, select “not applicable.” When case management is provided
as a Medicaid administrative activity, states must ensure that the costs are in accordance with the
approved cost allocation plan. CMS does not approve cost allocation plans via the waiver
application.
Item C-1-c: Delivery of Case Management Services
Instructions
In the text field, specify the entity or entities that conduct case management functions on behalf
of waiver participants and the requirements for their training on the HCBS settings and personcentered planning regulatory requirements. Do not complete if case management is a service
covered through the waiver and defined in C-1/C-3.

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Item C-1-d: Remote/Telehealth Delivery of Waiver Services
Instructions
Specify in the chart whether each waiver service that is specified in Appendix C-1/C-3 can be
delivered remotely/via telehealth. If any waiver services can be delivered remotely/via
telehealth, add a response for the items below the chart.
Technical Guidance
“Telehealth” refers to a general service modality, and states may use other terms to reflect the
use of telehealth in their HCBS waivers.
If the state is planning to allow for any waiver services to be delivered remotely/via telehealth,
include the following information in the waiver application:
•
•
•
•
•

How the remote service will be delivered in a way that respects the privacy of the
individual especially in instances of toileting, dressing, etc.
How the telehealth service delivery will facilitate community integration.
How the telehealth will ensure the successful delivery of services for individuals who
need hands on assistance/physical assistance, including whether the service may be
rendered without someone who is physically present or is separated from the individual.
How the state will support individuals who need assistance with using the technology
required for telehealth delivery of the service.
How the telehealth will ensure the health and safety of an individual.

Appendix C-2: General Service Specifications
Overview
Appendix C-2 addresses topics that typically cut-across several waiver services rather than
applying only to specific, individual services. In part, this appendix is designed to relieve states
of having to repeat information multiple times in each service’s specification (e.g., a requirement
that a direct service worker must undergo a criminal background investigation). Additional
topics that are addressed include the provision of services in facilities that are subject to the
requirements of the Keys Amendment (section 1616(e) of the Act) and whether a state pays
legally responsible individuals, relatives and/or legal guardians for the provision of waiver
services.
Detailed Instructions for Completing Appendix C-2
Item C-2-a: Criminal History/Background Investigations
Instructions
When individuals who provide waiver services must undergo a criminal history/background
investigation, select the “yes” response and specify in the text field the types of positions (e.g.,
personal assistants) for which such investigations are required, the scope of the required
investigation (e.g., state or national background check), and the process that is employed to
ensure that mandatory investigations have been conducted, including the entity responsible for
conducting the investigation. If the state does not require that such investigations be conducted
for any type of position that furnishes waiver services, select the “no” response.

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Technical Guidance
As a safeguard, most states require that individuals who provide direct support and/or other
services to waiver participants undergo a pre-employment criminal history check and/or
background investigation. Here, identify the types of positions for which such checks or
investigations are required, the entity that is responsible for conducting checks or investigations
(e.g., provider agency), and the nature of such investigations. When investigations or checks are
required, explain how the state ensures that they have been conducted in accordance with the
state’s policies (e.g., as part of the certification of workers or as part of the periodic review of
provider agencies). The response may cite applicable state laws, regulations, or policies that
pertain to this topic. The material cited must be readily available through the Medicaid agency or
the operating agency (if applicable) upon request by CMS. When criminal history and/or
background investigations are required, this information need not be repeated in the provider
qualifications section of the applicable service specifications in Appendix C-3.
CMS Review Criteria
When criminal history/background investigations are required, the waiver specifies:
• The types of positions that must undergo such investigations;
• The entity responsible for conducting the checks or investigations;
• The scope of the required investigation; and
• The state’s process to ensure that mandatory investigations have been conducted
Item C-2-b: Abuse Registry Screening
Instructions
If abuse registry screening is required, select the “yes” response and specify in the text field: (a)
the entity (entities) responsible for maintaining the abuse registry; (b) the type of positions (e.g.,
personal assistants, case managers) for whom abuse registry screenings must be conducted; and,
(c) the process for ensuring that mandatory screenings have been conducted, including the entity
responsible for conducting the screening against the registry, and (d) the process for ensuring
continuity of care for a waiver participant whose service provider was added to the abuse
registry. If abuse registry screening is not conducted, select the “no” response.
Technical Guidance
As an additional safeguard, many states maintain abuse registries and require that workers who
furnish direct services to waiver participants and other positions to undergo pre-employment
screening through such a registry. This item asks whether such screening is required and, if so,
requests that the state provide information about such screening. State laws, regulations, or
policies cited in the response to this item must be readily available through the Medicaid agency
or the operating agency (if applicable) when requested by CMS. When abuse registry screening
is required, this information need not be repeated in the provider qualifications section of the
applicable service specifications in Appendix C-3.

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CMS Review Criteria
When abuse registry screening is required, the waiver specifies:
• The entity (entities) responsible for maintaining the abuse registry;
• The type of staff for whom abuse registry screenings must be conducted;
• The entity or entities responsible for conducting the screening against the registry;
• The state process for ensuring that mandatory screenings have been conducted; and,
• The process for ensuring continuity of care for a waiver participant whose service provider
was added to the abuse registry.
Item C-2-c: Facilities Subject to Section 1616(e) of the Social Security Act
With publication of final regulations in 2014 and the addition of the section Appendix C-5
regarding home and community-based settings requirements, this section of the waiver
application is no longer needed. Therefore, this section was removed from the waiver
application in 2022 and all instructions and technical guidance for this section of the waiver
application were removed from the Technical Guide. States need to complete Appendix C5upon renewal .
Discussion: Items C-2-d and C-2-e
Items C-2-d and C-2-e address similar topics but are distinct. Both concern state policies
regarding payment for the provision of waiver services by individuals who are related to the
participant (and, in the case of Item C-2-e, a legal guardian of a participant). However, the scope
of Item C-2-d is narrow. It solely concerns payment for the provision of personal care or similar
services by legally responsible individuals (e.g., a parent of minor child). The instructions for
Item C-2-d below define “personal care or similar services.”
Item C-2-e addresses state policies regarding the payment for the provision of any type of waiver
service by a relative or legal guardian, and the provision of services other than personal care by
legally responsible individuals (keeping in mind that the provision of personal care or similar
services by such persons has been addressed in Item C-2-d). In this item, a state specifies
whether it permits payments to relatives or legal guardians for waiver services and, if so, any
conditions or limitations that the state places on such payments. For example, a state may decide
to make payments to relatives or legal guardians only in certain circumstances, for limited
periods of time, or permit payment to be made only to specified types of relatives (e.g., relatives
who do not reside in the same household as the participant).
States are required to ensure individuals have access to needed services, and when necessary,
states should strongly consider the authorization of legally responsible individuals to meet the
requirement of ensuring the delivery of needed services. It is up to the state to decide whether to
provide for either type of payment and, when such payments are made, to specify the
circumstances when they are permitted. In the Appendix C-3 service specification template,
there are check-offs as to whether the state allows for the provision of a service by a legally
responsible individual and/or a relative/legal guardian. The conditions on payment specified in
Items C-2-d and C-2-e apply to these check-offs. For example, if a state provides in Item C-2-e
that a relative may furnish waiver transportation services only when there is no other provider
available, then that that condition applies when “relative/legal guardian” is checked as a potential
provider of the transportation service in Appendix C-3.

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Whenever a legally responsible individual or relative/legal guardian is paid for the provision of a
waiver service, the individual must meet the provider qualifications that apply to a service in
accordance with 42 CFR §§ 441.302(a)(1) and (2) and there must be a properly executed
provider agreement, in accordance with 42 CFR § 431.107(b). In addition, other requirements
such as the proper documentation and monitoring of the provision of services also apply.
Lastly, other regulatory provisions such as 42 CFR §§ 441.301(c)(1) and (c)(4) regarding the
person-centered planning process and HCBS settings criteria continue to apply, including the
requirements at 42 CFR § 441.301(c)(1)(vii): “The person-centered planning process: offers
informed choices to the individual regarding the services and supports they receive and from
whom.”
Item C-2-d: Provision of Personal Care or Similar Services by Legally Responsible
Individuals
Instructions
Select whether the waiver provides for extraordinary care payments to legally responsible
individuals for the provision of personal care or similar services. If so, specify: (a) the types of
legally responsible individual(s) who may be paid to furnish such services and the services they
may provide; (b) the method for determining that the amount of personal care or similar services
provided by a legally responsible individual is “extraordinary care” , exceeding the ordinary care
that would be provided to a person without a disability or chronic illness of the same age, and
which are necessary to assure the health and welfare of the participant and avoid
institutionalization; (c)the state policies to determine that the provision of services by a legally
responsible individual is in the best interest of the waiver participant; (d) the state processes to
ensure that legally responsible individuals who have decision-making authority over the
selection of waiver service providers use substituted judgement on behalf of the individual; (e)
any limitations on the circumstances under which payment will be authorized or the amount of
personal care or similar services for which payment may be made; (f) any additional safeguards
the state implements when legally responsible individuals provide personal care or similar
services; and, (g) the procedures that are used to ensure that payments are made only for services
rendered.
Technical Guidance
Through an HCBS waiver, a state may elect to make payment for personal care or similar
services that are rendered by legally responsible individuals (as defined in state law or
regulations, such as a parent (biological or adoptive) or guardian of a minor child) when such
services are deemed extraordinary care so long as the state specifies satisfactory criteria for
authorizing such payments. The criteria must include how the state will distinguish
extraordinary from ordinary care. By extraordinary, CMS simply means care exceeding the
range of activities that a legally responsible individual would ordinarily perform in the household
on behalf of a person without a disability or chronic illness of the same age, and which are
necessary to assure the health and welfare of the participant and avoid institutionalization. For
example, support for activities of daily living such as bathing and dressing by a legally
responsible individual to a teenage child enrolled in a waiver could constitute extraordinary care,
as teenage children without a disability or chronic illness do not typically require such support.
In the context of this item, personal care or similar services mean: (a) personal care (assistance
with ADLs or IADLs) whether furnished in the home or the community and however titled by
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the state in the waiver (e.g., personal assistance, attendant care, etc.) and (b) closely related
services such as home health aide, homemaker, chore, and companion services. When a state
provides for the payment to legally responsible individuals for extraordinary care, the service
must meet all the waiver criteria required when delivered by a customary provider. The legally
responsible individual must meet the provider qualifications (as specified in Appendix C-3) that
the state has established for the personal care or similar services for which payment may be
made. The state must also ensure waiver participants have informed consent of providers of such
services in accordance with Appendix D-1-f and must monitor the delivery of those services as
provided in Appendix D-2, including the required documentation and assurance that the services
are delivered in accordance with the service plan. In addition, as with all providers, such
arrangements require the proper execution of a provider agreement, and, as with all services,
states are to implement payment review procedures to ensure that the services for which payment
is made have been rendered in accordance with the service plan and the conditions that the state
has placed on the provision of such services.
For waiver services that states permit to be provided by legally responsible individuals, state
policies should include determining that the provision of personal care or similar services by a
legally responsible individual is in the best interests of the waiver participant and, in instances
when the legally responsible individual has decision-making authority over the selection of
providers of waiver services, ensuring that the legally responsible individual uses substituted
judgement on behalf of the individual (i.e., makes decisions based on an understanding of what
the individual would want).
States may choose to specify limitations on the utilization of legally responsible individuals, such
as specific circumstances under which legally responsible individuals may be paid providers,
such as:
•

•

Limiting the amount of services that a legally responsible individual may furnish. For
example, a state may decide to limit the amount to no more than 40 hours in a week and
thereby take into account the amount of care that a legally responsible individual
ordinarily would provide. When there is such a limitation, it should be reflected in the
limitations section of the service specification in Appendix C-3. Note that states may
need to revisit such limitations if they are unable to meet the waiver assurance that
services are delivered in accordance with the service plan, including in the type, scope,
amount, duration, and frequency specified in the service plan.
Addressing other foreseeable risks that might attend the provision of services by legally
responsible individuals. States should describe these risks and mitigation strategies.

When legally responsible individuals are used to deliver services, all required statutory and
regulatory components of 1915(c) waivers must continue to be met, including, but not limited to,
an individual’s free choice of providers, adherence to person-centered service planning,
health and welfare oversight, and ensuring community integration consistent with the home and
community-based settings regulations.
In addition, states should be aware that unless the waiver uses institutional eligibility rules that
disregard the family income of a child waiver participant, paying a legally responsible relative
may affect the child’s eligibility for Medicaid.

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To summarize, when a state provides for payment to legally responsible individuals for the
provision of personal care or similar services, the services will be equivalent to services supplied
by other types of providers. The waiver must also specify:
•

The types of legally responsible individual (as defined in state law or regulations) to
whom payment may be made;

•

The waiver personal care or similar services for which payment will be made;

•

How the state distinguishes extraordinary care from ordinary care;

•

The state policies to determine that the provision of personal care or similar services by a
legally responsible individual is in the best interests of the participant;

•

When the legally responsible individual has decision-making authority over the selection
of providers of waiver services, the state’s process for ensuring that the legally
responsible individual uses substituted judgement on behalf of the individual;

•

Any limitations of the circumstances under which payment will be authorized;

•

Any limitations on the amount of services for which payment will be made;

•

Any additional safeguards not specified above the state implements when legally
responsible individuals provide personal care or similar services;

•

How the state implements required oversight, such as determining that payments are
made only for services rendered.

CMS Review Criteria
When the waiver provides for the payment for personal care or similar services to legally
responsible individuals for extraordinary care, the waiver specifies:
• The types of legally responsible individuals to whom payment may be made;
• The waiver personal care or similar services for which payment may be made;
• The method for determining that the amount of personal care or similar services provided
by legally responsible individual is “extraordinary care,” exceeding the ordinary care that
would be provided to a person without a disability or chronic illness of the same age, and
which are necessary to assure the health and welfare of the participant and avoid
institutionalization;
• The state policies to determine that the provision of personal care or similar services by a
legally responsible individual is in the best interests of the participant;
• When the legally responsible individual has decision-making authority over the
selection of providers of waiver services, the state’s process for ensuring that the legally
responsible individual uses substituted judgement on behalf of the individual;
• Any limitations on the circumstances under which payment will be authorized or the
amount of personal care or similar services for which payment may be made;
• Any additional safeguards the state implements when legally responsible individuals
provide personal care or similar services; and
• The procedures that are used to implement required state oversight, such as ensuring that
payments are made only for services rendered.

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Item C-2-e: State Policies Concerning Payment for Waiver Services Furnished by
Relatives/ Legal Guardians
Instructions
This item concerns state policies regarding payment for waiver services rendered by
relatives and/or legal guardians that do not fall within the scope of Item C-2-d. Select
whether the state makes payments to relatives or legal guardians for any waiver service (besides
personal care or a similar service furnished by a legally responsible individual as described in C2-d). If the state makes payments to relatives and/or legal guardians for waiver services, select
one of the next three choices and provide the additional information under the selected choice.
Technical Guidance
At the option of the state, waiver services may be provided by a relative and/or legal guardian of
the participant. When responding to this item, keep in mind that Item C-2-d addresses
extraordinary care payments to legally responsible individuals who furnish personal care or
similar services to a waiver participant. For the purposes of this item, legally responsible
individuals are considered to be a type of “relative” with respect to payments for the
provision of waiver services other than personal care or similar services. When a relative or
legal guardian may be paid to provide waiver services, the relative or legal guardian must meet
the provider qualifications that have been specified for the service. Services must be monitored
as provided in Appendix D-2 and there must be a properly executed provider agreement.
This item presents four response choices as follows:
•
•

No Payments. A state may elect not to make payments to relatives or legal guardians for
the provision of any waiver services.
Specific Circumstances. A state may elect to pay relatives or legal guardians for the
provision of specified waiver services only in specific circumstances. Such
circumstances must be specified by the state. Specific circumstances might include: (a)
the lack of a qualified provider in remote areas of the state; (b) the lack of a qualified
provider who can furnish services at necessary times and places; (c) the unique ability of
a relative or legal guardian to meet the needs of a person; and/or, (d) other circumstances
specified by the state.
When this choice is selected, the waiver must specify the following:
o The types of relatives or legal guardians that may be paid to furnish waiver
services. For example, a state may specify that relatives may be paid to furnish
services but not legal guardians. The state may specify that only relatives who do
not live in the same household as the participant may be paid to furnish services.
A state may specify that certain types of relatives may be paid to furnish services
(e.g., grandparents of the participant) but others may not (e.g., legally responsible
individuals). A state may provide that legally responsible individuals may be paid
to furnish services (other than personal care or similar services, which have been
addressed in Item C-2-d) that require specialized skills (e.g., nursing or physical
therapy), provided that the legally responsible individual is not legally obligated
to furnish such services.
o The types of waiver services, and any limitations on the amount of waiver
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o
o
o
o
o

legally responsible individuals may be permitted to furnish personal care or
similar services.
The specific circumstances when payment may be made to a relative or legal
guardian. The waiver also must describe the method for determining when these
circumstances apply.
When payment may be made to a relative/legal guardian, the waiver should
include the state policies for determining that the provision of waiver services by
a legal guardian is in the best interests of the waiver participant.
When the relative/legal guardian has decision-making authority over the selection
of providers of waiver services, the state’s process for ensuring that the legally
responsible individual uses substituted judgement on behalf of the individual;
Any additional safeguards the state implements when relatives/legal guardians
provide waiver services; and
The procedures that are followed to ensure that payment is made only for services
rendered.

In Appendix C-3, there is the opportunity to select whether a waiver service may be provided
by a legally responsible individual or a relative/legal guardian. When this choice has been
selected, the selection in Appendix C-3 is qualified by the response to this item (i.e.,
“relative/legal guardian” means the types that are specified in this item). It is not necessary
to repeat the information provided in response to this item in the service specifications.
•

•

Specific Circumstances Do Not Apply. A state may provide that relatives or legal
guardians are permitted to be paid for rendering waiver services but not limit payment for
such services to specific circumstances. That is, provided that the relative otherwise
meets the qualifications to provide a service, the state will make payment to the relative
or legal guardian. When this selection is made:
o Specify any limitations on the types of relatives or legal guardians who may
furnish services (e.g., whether legally responsible individuals are excluded).
o In Appendix C-3, for each waiver service that a relative or legal guardian may
furnish, check off relative/legal guardian as a provider type. When relative/legal
guardian is not checked off in Appendix C-3, the state does not allow relatives or
legal guardians to be paid to furnish the service. For example, if this selection has
been made in Item C-2-e and transportation is the only service that has been
checked off in Appendix C-3, then only the relatives or legal guardians specified
here may be paid to furnish transportation and they may not be paid to provide
any other waiver services.
o Specify the state policies to determine that the provision of waiver services by a
relative/legal guardian is in the best interests of the participant.
o When the relative/legal guardian has decision-making authority over the selection
of providers of waiver services, the state’s process for ensuring that the legally
responsible individual uses substituted judgement on behalf of the individual.
o Specify the procedures that have been established to ensure that payment is made
only for services rendered.
Other Policy. Select this choice when either of the foregoing two choices does not
accommodate the state’s policies. For example, the state may restrict payment for waiver
services to specific circumstances in the case of some services or certain types of
relatives or legal guardians but not in the case of other services or other types of relatives
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or legal guardians. When this choice is selected, the information provided in the text
field should parallel that required in the foregoing choices, depending on whether specific
or extraordinary circumstance are involved.
CMS Review Criteria
When the waiver provides for the payment of services furnished by relatives or legal guardians:
• The types of relatives or legal guardians to whom payment may be made are specified.
• The waiver services for which payment may be made to relatives or legal guardians are
specified.
• When relatives or legal guardians may be paid to furnish waiver services only in specific
circumstances, the waiver specifies the circumstances and the method of determining that
such circumstances apply.
• Limitations on the amount of services that may be furnished by a relative or legal guardian
are specified.
• The state policies to determine that the provision of waiver services by a relative/legal
guardian is in the best interests of the participant are specified.
• When the relative/legal guardian has decision-making authority over the selection of
providers of waiver services, the state has a process in place for ensuring that the
relative/legal guardian uses substituted judgement on behalf of the individual.
• Any additional safeguards the state implements when relatives/legal guardians provide
waiver services are specified.
• The waiver specifies the procedures that are employed to ensure that payment is made
only for services rendered.
Item C-2-f: Open Enrollment of Providers
Instructions
In the text field, specify the processes that are employed to assure that all willing and qualified
providers have the opportunity to enroll as waiver service providers.
Technical Guidance
Except when a section 1915(c) waiver operates concurrently with a waiver granted under section
1915(b) of the Act waiving section 1902(a)(23) with respect to Medicaid beneficiary free choice
of provider, any willing and qualified provider must be afforded the opportunity to enroll as a
Medicaid provider. A willing provider is an individual or entity that executes a Medicaid
provider agreement and accepts the state’s payment for services rendered as payment in full. A
qualified provider is a provider that meets the provider qualifications set forth in the approved
waiver. In accordance with 42 CFR § 431.51. the state must provide for the continuous, open
enrollment of waiver service providers.
A state may not place obstacles in the way of open provider enrollment (e.g., by selecting only a
limited number of providers to furnish a waiver service through an RFP process, requiring that a
provider be capable of furnishing services on a statewide basis or requiring that a provider
contract with a governmental entity (other than the Medicaid agency) or affiliate with an
Organized Health Care Delivery System). States have latitude in establishing qualifications to
ensure that providers possess the requisite skills and competencies to meet the needs of the
waiver target population. However, a state may not specify qualifications that are unnecessary to
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ensure that services are performed in a safe and effective manner. When CMS reviews the
qualifications associated with each waiver service, it examines whether the proposed
qualifications create obstacles to the enrollment of all willing and qualified providers.
In response to this item, describe the processes that are employed in conjunction with the
operation of the waiver to assure that all willing and qualified providers have the opportunity to
enroll as waiver providers. Potential providers should have ready access to information
regarding the requirements and procedures to enroll as waiver providers. Effective processes
might include making provider enrollment information and forms continuously available via the
internet and/or periodically soliciting open provider enrollment in which times any provider that
met the waiver provider qualifications would be enrolled by the state.
Section 1915(c) Waivers that Operate with Concurrent Managed Care. In the case of
section 1915(b)/1915(c) concurrent waivers or other managed care authorities running
concurrently with a 1915(c) waiver, it may be possible for a state to limit the providers of
services by requesting a waiver of section 1902(a)(23) of the Act. In general, this waiver (most
frequently granted under the provisions of section 1915(b)(4) of the Act) is employed to permit a
state to contract with a limited number of managed care entities through which Medicaid
beneficiaries obtain waiver and other services. Under a concurrent waiver, beneficiaries may be
required to enroll with a managed care entity to receive services (when a waiver is granted under
the provisions of section 1915(b)(1) of the Act) or may elect to voluntarily receive services
through a managed care entity rather than through the regular Medicaid program (i.e., a state
does not request a waiver under the provisions of section 1915(b)(1)).
In any case, a state must assure compliance with the provisions of 42 CFR § 438.207 which
provides that each managed care entity “maintains a network of providers that is sufficient in
number, mix, and geographic distribution to meet the needs of the anticipated number of
enrollees in the service area.” This requirement extends to providers of home and communitybased waiver services that are furnished under the concurrent waivers.
In the case of section 1915(b)/1915(c) concurrent waivers, a state should respond to this item by
briefly describing how it will assure compliance with 42 CFR § 438.207 with respect to the
delivery of home and community-based waiver services, including describing any applicable
provisions of its contracts with managed care entities.
The state should similarly respond here if the 1915(c) waiver is operating concurrently with
another managed care authority, including sections 1932(a), 1915(a), or 1115 demonstrations.
CMS Review Criteria
• The provider enrollment processes described assure that all willing and qualified providers
have the opportunity to enroll.
• Providers have ready access to information regarding requirements and procedures to
qualify, and the timeframes established for qualifying and enrolling in the program.

Item C-2-g: State Option to Provide HCBS in Acute Care Hospitals
Instructions
Specify whether the state chooses the option to provide waiver HCBS in acute care hospitals. If
the state chooses this option, specify: the services in this waiver can be provided by the 1915(c)
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HCBS provider when they are not duplicative of services available in the acute care hospital
setting; how the 1915(c) HCBS will assist the individual in returning to the community; and
whether there is any difference from the typically billed rate for these HCBS provided during an
acute care hospitalization (which is specified in the rate methodology in Appendix I-2-a).
Technical Guidance
Under section 3715 of the Coronavirus Aid, Relief, and Economic Security (CARES) Act,
Congress added to the Social Security Act under section 1902(h)(1) a new provision that allows
states to provide HCBS in acute care hospitals under certain conditions. In accordance with
section 1902(h)(1) of the Act, the services must be:
•
•

identified in an individual’s person-centered service plan (or comparable plan of care);
provided to meet the needs of the individual that are not met through the provision of
hospital services;
not a substitute for services that the hospital is obligated to provide through its conditions
of participation, under federal or state law, or under another applicable requirement; and
designed to ensure smooth transitions between acute care settings and home and
community-based settings, and to preserve the individual’s functional abilities.

•
•

CMS Review Criteria
If the state selected yes to this option:
•
•
•
•

The waiver services that can be provided in acute care hospitals are specified.
How the HCBS provided in acute care hospitals will assist individuals in returning to
the community is described.
Any difference from the typically billed rate for the HCBS when provided during
acute care hospitalization is described.
If there is a difference in the typically billed rate, this is included in the rate
methodology in Appendix I-2-a.

Quality Improvement: Qualified Providers
The state demonstrates that it has designed and implemented an adequate system for
assuring that all waiver services are provided by qualified providers.
The state verifies that providers initially and continually meet required licensure
and/or certification standards and adhere to other standards prior to their
furnishing waiver services.
The state monitors non-licensed/non-certified providers to assure adherence to
waiver requirements.
The state implements its policies and procedures for verifying that provider training
is conducted in accordance with state requirements and the approved waiver.
Instructions
The QIS must describe how the state Medicaid agency will determine that each waiver
assurance (and its associated component elements) is met. The waiver assurance and
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component elements are listed above. For each component element, this description must
include:
•

•

The frequency at which system performance is measured.

CMS Review Criteria
The discovery of compliance with this assurance and the remediation of identified problems
must address how the Medicaid agency assures compliance with the following provider
qualification sub assurances:
•

•

The state verifies that providers initially and continually meet required licensure and/or
certification standards and adhere to other standards prior to their furnishing waiver
services;
The state monitors non-licensed/non-certified providers to assure adherence to waiver
requirements;
The state implements its policies and procedures for verifying that provider training is
conducted in accordance with state requirements and the approved waiver.
How frequently oversight is conducted; and

•

The entity (or entities) responsible for the discovery and remediation activities.

•
•

Appendix C-3: Waiver Services Specifications
Overview
In Appendix C-3, the specifications of each service that is offered under the waiver (and listed in
Appendix C-1) are detailed. The next section provides technical guidance concerning the
coverage of services under a waiver and detailed instructions for completing the application’s
waiver service specifications template.
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Technical Guidance Concerning Service Coverage
Introduction
States have considerable latitude in selecting and specifying the services that are offered through
a waiver. Section 1915(c) of the Act specifically authorizes the provision of several types of
home and community-based services. A state may propose to offer other services that are not
listed in the statute, subject to CMS approval. Waiver services complement and supplement
services that are furnished under the state plan. Waiver services may not duplicate the services
that are provided under the state plan, but a waiver may expand upon the amount, duration, and
frequency of services provided under the state plan except for EPSDT services. The selection of
services to meet the needs of the waiver’s target population clearly is a critical consideration in
designing an effective waiver program.
While states have flexibility in selecting and specifying a waiver’s services, there are certain
requirements that must be met in specifying service coverage and additional considerations that
states should take into account in designing their waiver programs and services. These topics are
discussed in the following sections. There also is a brief overview discussion of waiver and
Medicaid requirements as they pertain to providers of waiver services.
Requirements Concerning the Specification of the Scope of Services
As provided in 42 CFR § 441.301(b)(4), a state is required to: “describe the services to be
furnished so that each service is separately defined.” The definition of each waiver service must
describe in concrete terms the goods and services that will be provided to waiver participants,
including any conditions that apply to the provision of the service. The definition of the service
(including any conditions that apply to its provision) is termed the “scope” of the service. When
specifying the scope of a service do not use terms such as "including but not limited to . . .," "for
example . . .," “e.g.,", “including . . .," “etc.” CMS will not approve vague, open-ended or overly
broad service definitions. The scope of a service must be readily ascertainable from the state’s
service definition – that is, the nature of what is provided to a waiver participant is expressed in
understandable terms. It is important to keep in mind that FFP is only available for the
performance of activities or the provision of goods that fall within the scope of the approved
waiver service.
The scope of a service may be defined in one of two ways. An exhaustive service definition may
be employed. An exhaustive definition specifies in detail the types of activities that are
undertaken on behalf of a waiver participant or the goods that may be provided to a participant.
For example, if a waiver includes the coverage of medical equipment, the service definition
could include a detailed list of each item of medical equipment that may be provided. Items not
included in the list will not be provided or reimbursed. If a state wishes to alter an exhaustive
service definition, it must submit an amendment request to CMS.
In the alternative, a service may be defined as to its purpose. For example, a state may elect to
cover "only those medical supplies needed for the respirator-related needs of a respiratordependent patient" without listing the specific supplies that might be furnished. When a service
is defined as to its purpose, it is not necessary to submit a waiver amendment to reflect changes
in the exact nature of the service that might occur post-approval. At the same time, when a
service is defined as to its purpose, the service definition may not be expressed in open-ended
terms. In addition, when a service is defined as to purpose, the service definition should specify
at least the component elements of the service. Many of the core service definitions included as
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an attachment to the instructions for this Appendix are examples of how services may be defined
as to their purpose.
As previously noted, states have the option of using the suggested core service definitions that
are included in the attachment, modifying those definitions to meet their needs or developing
their own service definitions. If a new service is proposed, its definition should use commonly
accepted terms and may not be open ended in scope. When new services are proposed, CMS
reviews the proposed service to ascertain whether the service:
•
•
•

Contributes to the community functioning of waiver participants and thereby avoids
institutionalization;
Is reasonably related to addressing waiver participant needs that arise as a result of their
functional limitations and/or conditions; and/or
Falls within the scope of §1915(c) of the Act and is not at odds with other provisions of
the Act.

Services that are diversional/recreational in nature fall outside the scope of section 1915(c) of the
Act. In addition, with some exceptions, waiver funds may not be employed to pay for room and
board expenses due to the general prohibition on coverage of room and board under section
1915(c) of the Act or to acquire goods and services that a household that does not include a
person with a disability would be expected to pay for as household expenses (e.g., subscription to
a cable television service).
The scope of the individual services included in a waiver may overlap. For example, the
provision of personal assistance often is a common element in the delivery of many waiver
services. It would be unreasonable and inefficient for CMS to require that services be defined in
a fashion to eliminate overlapping activities by requiring that all forms of personal assistance be
furnished under a single personal assistance service. At the same time, there must be mechanisms
to prevent duplicate billing of services in accordance with the Improper Payments Elimination
and Recovery Act of 2010. When, for instance, a state provides for the “free-standing” coverage
of personal assistance but includes the provision of personal assistance as an integral element of
the delivery of a residential or day service, the state must prohibit the billing of the free-standing
coverage for personal assistance activities that are performed during periods when the waiver
participant receives the residential or day service that already includes the provision of personal
assistance and payment for personal assistance activities have been included in the payment for
the residential or day service.
In a similar vein, the situation may arise when a waiver participant may be concurrently
receiving two services that are nominally duplicative or overlapping. For example, when a
participant is directing waiver services, the participant may be concurrently receiving both case
management and information and assistance in support of participant direction (a.k.a., support
brokerage). The performance of both services may entail performing similar functions (e.g.,
assisting the participant to locate service providers). CMS does not require that service
definitions be fashioned to eliminate all potential overlap (e.g., by only permitting support
brokers or case managers to provide assistance in locating providers but not both). However,
service definitions should be structured so that they prevent the duplicative performance of and
billing for the same activity undertaken on behalf of a waiver participant by multiple providers.
For example, it is permissible for a case manager to bill for the time that the case manager
spends in developing a service plan and for a support broker to bill for the time spent advising
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the participant during the service plan development process. It would not be permissible for both
the case manager and the support broker to bill for the preparation of the service plan. When
there is the potential for duplicative billing for the performance of overlapping functions, states
are advised to specify clearly in the relevant service definitions how the underlying activities are
distinct and/or how duplicative billing will be prevented.
The regulation at 42 CFR § 441.301(b)(4) also provides that “multiple services that are generally
considered to be separate services may not be consolidated under a single definition.” The chief
reasons why services may not be “bundled” are to: (a) ensure that waiver participants can
exercise free choice of provider for each service and (b) ensure that participants have access to
the full range of waiver services. Bundling means the combining of disparate services with
distinct purposes (e.g., personal care and environmental modifications) under a single definition
and providing that the combined services will be furnished by a single provider entity (e.g., one
provider would furnish both personal care and environmental modifications) that is paid one rate
for the provision of the combined services. CMS will consider a combined or bundled service
definition only when it is established that the bundling of services will result in more efficient
delivery of services but not compromise an individual's access to services or free choice of
providers. When a bundled service definition is proposed, the costs of each component service
must be separately identified in the estimate of Factor D in Appendix J-2 and utilization/costs
must be tracked during the period that the waiver is in effect (i.e., encounter-type data must be
compiled).
A service usually is not deemed to be a “bundled” service in the following circumstances:
•
•

•

When the tasks/activities that are conducted on behalf of a participant are closely related
or require similar provider skills (e.g., the provision of homemaker, chore and personal
care services by an “in-home supports” service worker);
The state groups related services under a single broad service title (e.g., “employmentrelated services”) but clearly provides that: (a) each component service (e.g.,
prevocational, supported employment and supports for self-employment) is separately
authorized in the service plan; (b) the participant may exercise free choice of providers
for each component service; and (c) each component service is separately billed. When
services are grouped under a broad service title, the costs and expected utilization of each
component service must be separately identified in the estimate of Factor D in Appendix
J-2 and utilization/costs of each component service must be tracked during the period that
the waiver is in effect; and
The service normally involves the co-provision of several services through a single
provider in order to achieve the purpose of the service. Residential services typically fall
into this category because of their round-the-clock nature.

Additional Considerations Concerning Service Coverage
There are several additional considerations that states should keep in mind when fashioning the
coverage of services under a waiver. These include:
A. Relationship of Waiver Services to State Plan Services
Waiver services may complement the services that a state furnishes to Medicaid beneficiaries
under the state plan by including services that are not covered under the state plan or supplement
state plan services by providing for the coverage of services offered under the state plan in an
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amount, frequency or duration greater than allowed under the state plan) the services that a state
furnishes to Medicaid beneficiaries under the state plan.
When reviewing proposed waiver service coverage, CMS will determine whether the service
already is covered under the state plan. If so, the service will be approved when the state is
proposing to exceed the limits imposed under the state plan (e.g., an extended state plan coverage
is proposed). When a service coverage is proposed that appears to duplicate a state plan
coverage, CMS will probe more deeply to determine whether the proposed waiver coverage is
sufficiently distinct from the state plan coverage to warrant approval. The coverage generally
will be considered distinct when: (a) the scope of the waiver coverage is materially different
from the state plan service (b) the providers of the waiver service are different from the providers
of the state plan service; and/or, (c) the method of service delivery is different (this difference
may entail the availability of participant direction options under the waiver which are not
available under the state plan). Coverage of services is not considered to be distinct when the
sole difference lies in the amount of or the method of payment for the service. When proposing
to cover a service that potentially overlaps the state plan coverage of a similar service, the state
should include information in the service definition that clearly delineates how the two coverages
differ.
In the case of certain services (e.g., specialized medical supplies and equipment), CMS
recognizes that it would be overly burdensome to require states to spell out in detail how the
waiver coverage does not duplicate coverage under the state plan. In such cases, it is acceptable
for a state to specify that the authorization of such services will include making a determination
that the state plan does not cover the item in question (either by determining that the state plan
does not cover the item or requiring that an item be subject to a coverage determination under the
state plan before it is authorized as a waiver service).
In addition, a state may not impair the access of waiver participants to services under the state
plan. A state may not provide that the receipt of a waiver service is grounds for the denial of a
state plan service for which the waiver participant may otherwise be eligible. For example, the
receipt of personal assistance services under a waiver may not serve as the basis for denying the
provision of home health services under the state plan. Similarly, a state may not require a
waiver participant to terminate the receipt of a state plan service as a condition for receiving a
waiver service. However, when authorizing waiver services, a state may take into account the
services that a waiver participant receives through the state plan. The overarching objectives of
this analysis are (1) to ensure that individuals have unfettered access to services to which they
are entitled; and, (2) to ensure that there is no duplication (or potential duplication) of payment
for services.
B. Pharmacy Services
Under the provisions of the Medicare Prescription Drug Benefit (Part D) of the Medicare
Prescription Drug, Improvement, and Modernization Act of 2003, states may not claim federal
financial participation in the costs of most drugs that are furnished to dual-eligible
Medicare/Medicaid beneficiaries on or after January 1, 2006. These beneficiaries will receive
prescribed drugs through the Medicare Part D benefit. As a consequence, when a state covers
pharmacy benefits under a waiver (usually as an extended state plan service in order to furnish
prescribed drugs in an amount greater than permitted under the state plan), the service
specification must exclude the provision of prescribed drugs available under Part D to dual
eligible beneficiaries except when a drug is not covered under Part D.
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State Medicaid Director letter #05-002 (included in Attachment C) provides further information
on drugs that are excluded from Part D coverage. When a state does not cover these excluded
drugs for dual-eligible beneficiaries under its state plan, the excluded drugs may be covered
under the waiver.
C. Relationship of Waiver Services to EPSDT Services
When a waiver serves children, the services that a state proposes to offer in the waiver must take
into account the expanded benefits that must be provided to Medicaid child beneficiaries
(individuals under the age of 21 who are eligible for Medicaid) under the Early and Periodic
Screening, Diagnostic and Treatment (EPSDT) provisions contained in section 1905(r) of the
Act. These provisions apply to children who are served in waivers, including children who
would not be eligible for Medicaid except by virtue of their enrollment in a waiver. The
intersection of HCBS waivers and EPSDT services is discussed in more detail in CMS State
Medicaid Director letter #01-006 Olmstead Update #4 (included in Attachment C).
Among its other provisions, section 1905(r) requires that Medicaid-eligible children receive
coverage of all services necessary to diagnose, treat, or ameliorate defects identified by an
EPSDT screen, as long as the service is within the scope of section 1905(a) of the Act.
irrespective of whether the state explicitly includes such benefits in its state plan.
In the case of waivers that serve children, the waiver still may be employed to provide services
that supplement the services available under the state plan, beyond those EPSDT benefits,
required under section 1905(r). Services that may be provided under a waiver to children could
include respite care, supported employment (in the case of older youth), and other services
approved by CMS that are cost neutral and necessary to prevent institutionalization.
If a service is available to a child under the state plan or could be furnished as service required
under the EPSDT benefit under the provisions of section 1905(r), it may not be covered as a
waiver service for child waiver participants. Thus, in a waiver that serves children, services such
as rehabilitative services (as defined in 42 CFR § 440.130), private duty nursing (as defined in 42
CFR § 440.80), physical and occupational therapy (as defined in 42 CFR § 440.110), and nurse
practitioner services (as defined in 42 CFR § 440.166) may not be furnished as waiver services
to children unless the waiver authorizes these services beyond what is considered medically
necessary under EPSDT.
When a waiver serves both children and adults, any waiver services that could be furnished in
accordance with the provisions of EPSDT requirements at section 1905(r) must be limited to
adult waiver participants since those services for waiver participants under the age of 21 are
provided as part of the EPSDT benefit. For example, if an extended state plan coverage is
proposed in order to provide a service in an amount greater than permitted under the state plan,
the coverage may only apply to adults, unless the waiver authorizes these services beyond what
is considered medically necessary under EPSDT.
States have an affirmative responsibility to ensure that all child waiver participants (including
children who become eligible for Medicaid by virtue of their enrollment in an HCBS waiver)
receive the medically necessary services that they require, including Medicaid coverable services
available under EPSDT. Because the HCBS waiver can provide services not otherwise covered
under Medicaid and can also be used to expand coverage to children with special health care
needs, EPSDT and HCBS waivers can work well in tandem. However, a child's enrollment in an
HCBS waiver cannot be used to deny, delay, or limit access to medically necessary services that
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are required to be available to all Medicaid-eligible children under federal EPSDT rules. While
states may limit the number of participants under an HCBS waiver, they may not limit the
number of eligible children who may receive EPSDT services. Thus, children cannot be put on
waiting lists for Medicaid coverable EPSDT services (those coverable under section 1905(a)).
Children who are enrolled in the HCBS waiver must also be afforded access to the full array of
EPSDT services. Moreover, under EPSDT, there is an explicit obligation to “make available a
variety of individual and group providers qualified and willing to provide EPSDT services”.
D. Children’s Education Services
Section 1915(c)(5)(C) of the Act indicates that habilitative services may not include special
education and related services under the provisions of Individuals with Disabilities Education
Improvement Act of 2004 (IDEA). The funding of such services is the responsibility of state and
local education agencies.
The IDEA requires the provision of comprehensive education and related services to children
and youth with disabilities who are enrolled in special education programs. As a consequence,
when a state proposes to include habilitation services and/or expanded habilitation such as
educational services in its waiver, CMS will review the proposed waiver coverage to ensure
that it does not provide for the payment of services that are mandated under IDEA.
If a state chooses to include habilitation services and/or expanded habilitation such as
educational services in schools as a service in a 1915(c) waiver:
•

•
•

If transportation between the participant's place of residence and the school site is
provided as a component of the services and the cost of this transportation is included in
the rate paid to providers of these services, include a statement to that effect in the service
definition.
Specify the service elements/activities that are furnished under the waiver.
Specify the process by which it will be determined that these services do not fall within
the requirements of the IDEA.

Section 1903(c)(3) of the Act provides that FFP is available for Medicaid services included in an
IEP.
As indicated in the December 15, 2014 letter to State Medicaid Directors, Medicaid-covered
services furnished in schools are eligible for reimbursement when Medicaid program
requirements are met. Aside from the habilitative services prohibition described above, this
includes 1915(c) waiver services.
E. Children’s Foster Care Services
Waiver services may be furnished to children in foster care living arrangements but only to the
extent that waiver services supplement maintenance and supervision services furnished in such
living arrangements and waiver services are necessary to meet the identified needs of children.
Pursuant to 42 CFR §433 Subpart D, waiver funds are not available to pay for maintenance
(including room and board) and supervision of children who are under the state’s custody,
regardless of whether the child is eligible for funding under Title IV-E of the Act. The costs
associated with maintenance and supervision of these children are considered a state obligation.
The costs associated with the treatment of these children may be Medicaid reimbursable.
Depending on the nature of the treatment (i.e., habilitation), the costs of treatment may be
eligible for FFP under a waiver.
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When waiver case management services are furnished to children in foster care who are eligible
for Title IV-E funding, the state must ensure that the claim for FFP does not include costs that
are properly charged as Title IV-E administrative expenses.
F. Rehabilitative Services
Waivers are not limited to the provision of habilitation services that are designed to teach
individual skills. A state also may cover rehabilitative services where the purpose is to restore
functioning. Rehabilitative services may be covered in a waiver as “other waiver services” since
rehabilitative services are not explicitly mentioned in section 1915(c) of the Act. When the state
plan covers rehabilitative services, they also may be offered in a waiver on an extended state
plan service basis. The receipt of rehabilitative services does not preclude the provision of
enhanced habilitation services to a waiver participant.
G. Prevocational and Supported Employment Services
Prevocational and supported employment services may be furnished as expanded habilitation
services under the provisions of section 1915(c)(5)(C) of the Act. They may be offered to any
target group for whom the provision of these services is appropriate and beneficial. As provided
in CMS State Medicaid Director letter Olmstead Update #3 (included in Attachment C), the
provision of these services is not limited to waiver participants with developmental disabilities.
However, such services may only be furnished to a waiver participant to the extent that they are
not available as vocational rehabilitation services funded under the Rehabilitation Act of 1973.
When a state covers prevocational and/or supported employment services in a waiver, the waiver
service definition of each service must specifically provide that the services do not include
services that are available under the Rehabilitation Act (or, in the case of youth, under the
provisions of the IDEA) as well as describe how the state will determine that such services are
not available to the participant before authorizing their provision as a waiver service.
Waiver funding is not available for the provision of vocational services (e.g., sheltered work
performed in a facility) where individuals are supervised in producing goods or performing
services under contract to third parties. Employment related waiver services must be provided in
accordance with CMCS Informational Bulletin dated September 16, 2011 (located in Attachment
D).
H. Services to Facilitate the Transition of Institutionalized Persons to the Community
In various State Medicaid Director letters issued since 2000 (located in Attachment C), CMS has
issued policy guidance concerning the provision of services for persons who transition from an
institutional setting to the community. This guidance provides that certain services may be
furnished in advance of the discharge of the person from the institutional setting and claimed for
federal financial participation once the individual enters the waiver. The basis of this policy
guidance is to assure the continuity of services for individuals who are returning to the
community. Community transition services may be furnished to facilitate the transition of
persons from any congregate setting (both institutional and non-institutional) to a more
independent/less restrictive living arrangement.
All transition services must be reasonable and necessary, not available to the participant through
other means, and clearly specified in the waiver participant’s service plan. States may not claim
FFP for services that are furnished or activities that are performed in advance of the individual’s
entrance to the waiver but may claim FFP once the person is enrolled in the waiver. If the
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individual should not enroll in the waiver due to unforeseen circumstances such as death or
change in eligibility status, the state may be able to claim for some or all of the transition
activities as administrative costs in accordance with an approved Medicaid cost allocation plan.
States have the flexibility to cover transition case management activities as either an HCBS
waiver service or as targeted case management under the state plan. States are encouraged to
include these transition services in their waiver programs. The relevant service specification
should indicate when a service is furnished on transition basis.
I. Participant Direction of Services
When the waiver provides for participant direction of services (as specified in Appendix E), it is
permissible to limit the availability of Financial Management Services and Information and
Assistance in Support of Participant Direction (when covered as a waiver service) to waiver
participants who have elected to direct some or all of their services. It also is permissible to limit
the availability of other waiver services to participants who have elected to direct their waiver
services when the delivery of the waiver service is tied to the use of the Employer or Budget
Authorities.
J. Provision of Waiver Services Out-of-State
Waiver services may be furnished in another state to a waiver participant. For example, it may be
more convenient for waiver participants to obtain services in a bordering state. In addition,
services such as personal assistance may be furnished to waiver participants who travel to
another state to visit family members or for other purposes.
Applicable policies and considerations regarding the provision of waiver services out-of-state are
delineated in CMS State Medicaid Director letter Olmstead Update #3 (included in Attachment
C). In brief, waiver services that are furnished out-of-state must meet the state of residence
waiver standards and requirements in all respects. That is, the out-of-state provider that
furnishes the services need to meet the same qualifications as in-state providers and there must
be a provider agreement in effect. In addition, when services are furnished out-of-state, they are
subject to the same monitoring requirements as if they were furnished in-state. This includes
assuring the health and welfare of the waiver participant and monitoring compliance with HCBS
settings criteria. As discussed in Olmstead State Medicaid Directors Letter #3, a state may enter
into agreements with other states to facilitate the provision of services out-of-state.
K. Provider Requirements
The waiver assurances at 42 CFR § 441.302(a) require that: (a) there are adequate standards for
all types of providers that provide services under the waiver and (b) that the standards must be
met when services are furnished. In other words, waiver services may only be furnished by
providers who have been found to meet all applicable qualifications. In Appendix C-3, the
standards that apply to each waiver service are specified along with the qualifications that
providers must meet. Considerations that apply to the specification of provider qualifications are
discussed below. In addition, the waiver’s quality improvement strategy related to providers in
Appendix C and in the systems improvement, strategies described in Appendix H must address
how the state will verify that providers meet applicable standards during the period that the
waiver is in effect.
In addition, it is important to keep in mind that section 1902(a)(27) of the Act (as further
specified in 42 CFR § 431.107(b)) requires that each provider of a Medicaid service have a
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provider agreement in effect with the Medicaid agency. This requirement applies to the
provision of waiver services and assures accountability in the provision of Medicaid services.
The Medicaid agency may authorize in writing that another entity (e.g., the operating agency)
may perform the administrative task of executing and holding the provider agreement on its
behalf. In the case of participant direction, a financial management services entity may be
authorized to execute the provider agreement on behalf of the Medicaid agency. There are two
exceptions to this requirement. When section 1915(c) waiver services are delivered through
managed care entities under a concurrent waiver, only the managed care entity has an agreement
with the Medicaid agency; network providers contract with the managed care entity rather than
the Medicaid agency. The other exception is when waiver services are delivered through an
Organized Health Care Delivery System (OHCDS) arrangement. Such arrangements are
discussed in more detail in the instructions for Appendix I.
L. Electronic/Remote Monitoring HCBS
States have the option to include services in the HCBS waiver that includes remote monitoring
and remote monitoring equipment to enhance/increase individuals’ independence. When remote
monitoring is permitted under an HCBS waiver service, safeguards must be in place to protect
individual rights and privacy and to ensure that the remote monitoring is not being used to
substitute for on-site staff unless it has been agreed upon by the individual and documented in
the individual’s person-centered service plan prior to use.
Remote (electronic) monitoring can include devices under an assistive technology and/or
environmental modifications waiver service. States may also propose to cover the costs of the
remote monitoring under a stand-alone service, which may or may not also include the remote
monitoring device/technology with a separate service cost component in the Factor D charts in
Appendix J of the waiver application. In the waiver service definition, the state needs to
demonstrate that the remote monitoring and/or device/technology will significantly enable the
individual to live, work or meaningfully participate in the community with less reliance on paid
staff supervision or assistance.
CMS will evaluate any request for electronic monitoring on a case-by-case basis and take into
consideration the need for the individual’s safety. Electronic monitoring should not take place of
staff monitoring as described in the individual’s person-centered service plan and should enable
the person to avoid possible institutional placement or placement in a more restrictive living
environment.
If the state includes electronic/remote monitoring inside of a waiver service, the state needs to
explain in the service definition:
•
•
•
•

Who will be responsible for the remote monitoring activity, including whether they are
on-site or on-call.
How the remote monitoring will facilitate community integration.
How the state will ensure that the individual’s right to privacy is being met, as well as
that of others in the home and what safeguards will be in place to protect individual rights
and privacy.
How the state will ensure that the waiver participant, involved family members and/or
guardian has agreed to the use of remote monitoring and that this is documented in the
individual’s person-centered service plan prior to use.

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•
•
•

How the remote monitoring will ensure the individual’s needs are being met and that
health and welfare needs are being addressed.
The back-up plan in the event of equipment/technology failure (e.g., evaluation of the
existence or availability of back-up power sources, alarms, additional person(s) to assist,
etc.).
For remote monitoring devices/equipment/technology the state needs to describe:
o Where devices/monitors will be placed, including whether the state will permit
placement of video cameras/monitors in bedrooms and bathrooms. If the state will
permit video cameras/monitors to be placed in bedrooms and bathrooms, how the
state will ensure that this is determined to be necessary on an individual basis and
justified in the person-centered service plan.
o The control that the waiver participant will have over the equipment, including
whether the waiver participant can turn off the remote monitoring
device/equipment, if they choose to do so, and how they are informed of this
option and how to do it.

Detailed Instructions for Completing Appendix C-3
Appendix C-3 is a template that is designed to consolidate pertinent information about the
specifications for each waiver service (e.g., its definition, pertinent limitations, and provider
qualifications). In the web-based application, the required information is entered by completing
webpages that are linked to each service. Each element of the template is discussed below.
Service Title
Instructions
Complete the text field with the title of the service. In the case of statutory services, select a
service from the drop-down list and enter an alternate title if one has been assigned.
Also, select the HCBS Taxonomy category and sub-category from the drop-down list. To add a
Taxonomy Category, select the category from the drop-down list under the Category heading.
To add a Taxonomy Sub-category, select the subcategory from the drop-down list under the Subcategory heading.
Technical Guidance
An important characteristic of 1915(c) waivers is state flexibility to identify new services and
supports. One challenge with this flexibility is that it is difficult to know what is happening in
HCBS at a national level. Measuring what occurs is a necessary step to demonstrating the
effectiveness of HCBS.
The HCBS Taxonomy, a standard categorization structure for Medicaid HCBS, was added to the
1915(c) application on March 1, 2014. A table with definition of the categories and
subcategories in the HCBS Taxonomy, titled the “Medicaid Home and Community-Based
Services (HCBS) Taxonomy Category and Subcategory Definitions,” is available on the WMS
website. The HCBS taxonomy provides an orderly classification of services so CMS can
aggregate data. CMS intends to use the taxonomy to provide national data regarding availability,
utilization, and expenditures of categories of HCBS. It also will enable states or CMS to
compare utilization and expenditures across states for categories of HCBS.

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The HCBS Taxonomy does not change state flexibility to identify and define services and
supports. States will be able to use the taxonomy to identify other states that provide a certain
type of service, even if the states use different names.
A combination of Taxonomy Category and Taxonomy Sub-Category is a single match of a
service to the HCBS Taxonomy. The Taxonomy Category includes a drop-down field with 17
categories of service that indicate distinct types of services. The category field must be entered
first.
The Taxonomy Sub-Category is a subset of a category to provide more specific information. A
few categories have only one sub-category. The drop-down options for the Sub-Category vary
based on the entry for the Taxonomy Category.
A service may include more than one Taxonomy Category and Sub-Category combination. A
state can enter up to four sets of Taxonomy Category and Taxonomy Sub-Category for a single
service. Multiple combinations of Taxonomy Category and Sub-Category are likely only for the
following:
•
•
•
•
•
•
•
•

Round-the-Clock Services: for example, some waivers have a service with more than
one type of residential habilitation;
Supported Employment: some waivers have a service that includes both job development
and ongoing supported employment;
Day Services: some waivers have a service that includes two types of day support, such
as adult day health and adult day care (social model); or day habilitation and
prevocational services;
Nursing: some waivers combine private duty nursing and skilled nursing in a single
service;
Caregiver Support: some waivers combine in-home and out-of-home respite in a single
service;
Caregiver Support and Participant Training: some waivers combine caregiver and
participant training in a single service;
Services Supporting for Self-Direction: some waivers combine financial management
services and information and assistance in a single service; and
Equipment, Technology, and Modifications: some waivers combine equipment and
supplies in a single service.

The service might have the same name as the Taxonomy Sub-Category, or the service might
have one of the common names listed in the taxonomy table document.
The state should check the definition to ensure the terms are used in the same manner, and if a
match is not obvious, look at the taxonomy document from top to bottom.
It is possible that two or more services from the same waiver could have the same Taxonomy
Category and Sub-Category. For example, a state may have separate services for case
management and transition case management.
States should consider the service as a whole, and not as discrete tasks. For example, many
states have an assisted living service that provides personal care, homemaker, and other supports.
In such instances, the service should be considered as a whole (e.g., Group Living, other), rather
than mapped separately to personal care, homemaker, etc.

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Some states define some services in part by what is NOT provided. For example, homemaker
does not include assistance with activities of daily living (ADLs). Therefore, the Taxonomy SubCategories within the home-based services category are presented approximately in a continuum
from more to less assistance.
In addition, personal care might include homemaking tasks as well as ADL assistance, and home
health aide and personal care might include similar assistance. If home health aide services
include supervision by a registered nurse or licensed therapist AND services provided by a
licensed home health agency, these services would fall under the HCBS Taxonomy category of
personal care.
Carry Over Services
Instructions
This section of the template is reserved for renewal waivers, new waivers that replace an
approved waiver and amendments that convert an approved waiver to the new application
format. In the case of each waiver service, indicate whether the coverage of a service included in
the approved waiver is being continued without modification, is carried over with modifications,
or is a new service that was not previously covered. This information will facilitate CMS
review.
Service Definition
Instructions
Describe the service definition in the text field.
Technical Guidance
The service definition specifies the scope of the service. The scope of a service describes the
purpose of the service, the types of activities that comprise the service, including, as applicable,
any goods that will be furnished to a waiver participant who receives the service. As
appropriate, the service definition may include additional parameters that apply to or affect the
provision of the service. Such parameters may include:
•

•

•
•

Conditions under which the service is considered necessary and thereby will be
authorized. For example, a state may limit the provision of skilled nursing services to
waiver participants who have specified needs that require the performance of certain
tasks by licensed nurses.
Requirements that a service be subject to additional review before it is furnished. For
example, a state may make the provision of behavioral support services subject to the
review and approval of a behavioral services clinician. Alternatively, the provision of
home accessibility modifications may require that a physical or occupational therapist
review their appropriateness.
Requirements that a service is subject to prior authorization by the Medicaid agency or
the operating agency (if applicable).
Other conditions that must be present in order for a service to be furnished. For example,
the provision of respite care may be restricted only to participants who reside with unpaid
caregivers. Alternatively, the waiver may provide that a service only will be furnished
when it is not available through the state plan.

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•

Specifications concerning when a service may not be furnished to a participant who is the
recipient of another service. For example, a state may provide that individuals who
receive residential services may not also receive freestanding personal assistance services
concurrently when such services are furnished as part of a residential service.
As previously noted, a state may limit the provision of certain services to persons who
have elected to direct their waiver services.

The parameters included in a service definition specify the circumstances when a service will or
will not be furnished. However, do not include in the service definition limitations on the
amount, frequency or duration of service. Such limitations are addressed in the next part of the
template.
When a service may be participant-directed, the participant usually has the authority to establish
additional parameters on the provision of the service (e.g., decide when the service will be
furnished and how the service will be furnished). Additional participant-specified parameters are
permissible as long as they comport with the underlying definition of the service.
Applicable Limits on Amount, Frequency, or Duration
Instructions
In the text field, specify applicable limits (if any) on the amount, frequency or duration of the
service (e.g., maximum allowable units, maximum allowable expenditure).
Technical Guidance
A limit on the amount of a service may take the form of a maximum allowable expenditure for
the service or the maximum number of units of the service that will be furnished during the
period of the service plan. A limit on frequency is a limit that restricts the number of units of
service that will be furnished during a shorter period of time (e.g., per week or per month). A
limit on duration is the maximum period of time over which a service will be provided or
authorized unless the necessity of the service is re-established.
When limits on amount, frequency or duration are applied, they should not pose obstacles to the
service achieving its stated purpose. A state may include a dollar limit on the amount of a
specific service per individual (for example home modifications may be limited to $10,000 in a
year) so long as the state continues to assure the health and welfare of the waiver participant
once the limit is reached. If the state establishes a dollar or other limit on a service, the state
must explain the steps that it will take to ensure that the individual’s needs can be met within the
dollar limit, what alternatives are available once the dollar limit is reached, and how the state will
continue to assure the waiver participants’ health and welfare.
A state may exempt waiver participants who exercise Budget Authority as provided in Appendix
E-2-b from a limitation on the amount, frequency, or duration of a service provided that: (a) the
service is included in the participant-directed budget; (b) the exemption does not result in a
change in the overall amount of the participant-directed budget; and, (c) the additional services
are authorized in the service plan. If participants who exercise Budget Authority are exempt
from the application of the limitation, include a statement to that effect in the text field.
When a state imposes limits on sets of services (e.g., a dollar limit applies to two or more
services in combination) or limits on the overall amount of waiver services that may be furnished
to a participant, such limits are specified in Appendix C-4.
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Provider Specifications
This part of the template consolidates information about the providers of the service, including
their qualifications. Provider means an individual or agency that performs the service on behalf
of the waiver participant, holds a Medicaid provider agreement to furnish the service, and
receives payment for services rendered. Each component of this part of the template is discussed
below. Preceding this discussion is a brief discussion of the nature and role of the Medicaid
provider agreement.
Provider Category(s)
Instructions
Indicate whether the service is provided by individual providers, agencies or both. For each
category of provider, list the types of providers who furnish the service.
Technical Guidance
An individual provider is defined as a person who is in independent practice and not employed
by a provider agency. Workers who are employed by a participant are considered to be
individual providers. List the type of individual provider (e.g., personal assistant, psychologist,
physical therapist).
An agency provider is an entity whose employees furnish the service or from which goods are
purchased. When a service is provided by an agency, also list the types of agencies that furnish
the service (e.g., home health agency, medical supply company, certified case management
agency). Additional information about each type of provider listed in this part of the template is
captured in the next two sections (provider qualifications and verification of provider
qualifications).
The situation frequently arises that a state elects to specify that a service is furnished by an
agency but requires that the agency employees who render the service meet specific
qualifications. For example, a state may decide to purchase skilled nursing services only from
home health agencies but require that the service may only be provided by licensed nurses who
are employed by the home health agency. In this instance, home health agency is listed as the
only provider type (because the agency holds the provider agreement and receives payment for
the services furnished by its nurse employees). The nurse employee is not considered to be the
provider even though the nurse renders the direct service. In the provider qualifications section
of the template (discussed below), the state may indicate that only licensed nurses may perform
the service).
The selection of the categories of providers who may furnish a service has implications for
waiver participant exercise of free choice of provider and access to waiver services. As a general
matter, free choice of provider and access to waiver services are enhanced when waiver
participants are able to select from among a wide variety of providers, including both individual
and agency providers. CMS will review the application to assess whether the types of providers
specified is overly narrow and thereby poses obstacles to waiver participants obtaining waiver
services from otherwise willing and qualified providers of services. This assessment will also
include reviewing the proposed provider qualifications to ensure that they are reasonable and
appropriate in light of the nature of the service and do not contain elements that would
unnecessarily constrict participant free choice of provider. When only agency providers may

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provide a service, CMS may request that the state furnish additional justification for not
permitting individual providers to furnish the service.
Provision by Legally Responsible Persons or Relatives/Legal Guardians
Instructions
Select whether the service may be furnished by a legally responsible person, relative and/or legal
guardian.
Technical Guidance
Items C-2-d and C-2-e detail the state’s policies with respect to permitting: (a) legally
responsible persons to furnish personal care or similar services and (b) relatives and/or legal
guardians to furnish waiver services. The checkboxes provided in this part of the template link
those policies to each waiver service. For example, if in Item C-2-e, the state provides that only
certain types of relatives but not legal guardians may provide a service, then the checkboxes for
relatives and legal guardians in this part of the template are interpreted in light of the policies
expressed in Item C-2-e.
Remote/Telehealth Delivery of Services
Instructions
Select whether the state will allow for providers to deliver the waiver service remotely/via
telehealth.
Technical Guidance
Item C-1-c specifies the state’s policies with respect to permitting waiver services to be delivered
remotely/via telehealth. “Telehealth” refers to a general service modality, and states may use
other terms to reflect the use of telehealth in their HCBS waivers.
Provider Qualifications
Instructions
For each type of individual or agency provider identified under the provider category section of
the template, specify the provider qualifications. Add as many providers as necessary in order to
accommodate all types of providers.
Technical Guidance
Provider standards or qualifications are the criteria that a provider must meet in order to provide
the waiver service. The template provides for three types of provider qualifications:
•
•

•

A license issued under the authority of state law. In this instance, provide the legal
citation of the applicable state law governing the issuance of the license. Do not include
the text of the state law;
A certificate issued by a state agency or other recognized body. For example, a
certificate may be issued as a result of a quality review of the provider or by a recognized
accreditation organization. In this instance, cite the applicable state regulations or
policies that serve as the basis of the certification; and
Other standards specified by the state. These other standards may be in addition to a
required license or certificate and must be specified.

One or more of these types of qualifications must be specified for each service.
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CMS has not promulgated minimum provider qualifications for waiver services. States have
latitude in establishing appropriate qualifications. Like other Medicaid services, waiver services
are subject to any relevant requirements contained in state law. However, provider qualifications
need to be reasonable and appropriate in light of the nature of the service. They need to reflect
sufficient training, experience, and education to ensure that individuals will receive services from
qualified persons in a safe and effective manner. Provider qualifications and standards should
not contain provisions that have the effect of limiting the number of providers by the inclusion of
requirements unrelated to quality and effectiveness.
Training is particularly important for person care service (PCS) providers, such as personal care
attendants (PCAs). While CMS has not established specific standards that states must meet, the
state should provide detailed information to demonstrate that PCAs are sufficiently trained and
educated to provide applicable waiver services. Details of the training can include but are not
limited to; the hours of training required for PCAs prior to starting their work with individuals,
any continuing educational opportunities available for PCAs, any state-sponsored training
programs, a detailed description of the delivery method and frequency of available training, and
the number of hours required for PCAs to maintain certification or licensure. Finally, the state
should document whether they maintain and make available to individuals and families a
provider listing or database for both qualified individual PCAs and PCS providers. For selfdirected services the individual and/or representative must identify the specific training needed to
meet the individual’s needs for assistance as part of the person-centered service plan.
As previously noted, there may be instances when a state elects to limit the providers of a service
to specific types of agencies, but the state should also describe the qualifications of the agency
employees who furnish the service directly. Such requirements may be reflected in the template
in various ways, depending on the nature of the requirement. In the example of skilled nursing
services previously discussed, the requirement that such services be provided by home health
agency employees who are licensed nurses can be reflected in the license column by citing the
license that the home health agency must possess and adding an “employee” section to cite the
license that the employee nurse must possess. Another alternative is to reflect employee
qualifications in the “other standard” column.
It is important to keep in mind that FFP is only available for waiver services that are furnished by
providers who have been determined to be qualified in accordance with 42 CFR § 441.302(a)(1)
and (2) when the service is furnished. Consequently, when a provider must meet certain
experience and training qualifications, the services that the provider renders may only be claimed
for FFP if the provider has completed all necessary training.
A state may provide that additional qualifications may be incorporated into the service plan in
order to meet the unique or specific needs of the participant. In addition, participants who
exercise the Employer Authority may require that the workers whom they hire to have skills or
characteristics that the participant judges are important to meeting the participant’s particular
needs. However, a state may not provide that provider qualifications will be solely specified in
the service plan or by the participant. In other words, a state must establish the essential
minimum qualifications that a provider must meet in order to be deemed a qualified provider and
the state must ensure that those requirements are met when the service is provided.

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Verification of Provider Qualifications
Instructions
For each type of provider (individual or agency), explain the entity or entities that are responsible
for verifying that the provider possesses the qualifications specified for the service prior to
delivery of the service and how often the qualifications are re-verified.
Technical Guidance
The verification of provider qualifications may be conducted by entities other than the Medicaid
agency or the operating agency (if applicable) as specified in Appendix A. In the case of
participant-directed services, the waiver may provide that the participant is responsible for the
verification of some or all provider qualifications. Financial management services entities also
may be tasked with verifying some or all provider qualifications.
There is no federally-required schedule for the re-verification of provider qualifications. In the
case of some types of providers (e.g., personal assistants), a state may provide that provider
qualifications are only re-verified as necessary. Irrespective of the schedule that is employed to
re-verify provider qualifications, the state has the responsibility to ensure that providers meet the
qualifications for each service on an on-going basis. Often, this may include specific program
documentation and visit verification methods. For PCS providers, states must describe
supervision and monitoring requirements that ensure only qualified providers are providing
personal care services.
Service Delivery Method
Instructions
Select whether the service is participant-directed, provider-managed or both. If the waiver does
not provide for participant direction of services, select only the provider-managed service
delivery method.
Technical Guidance
Provider-managed means that the service provider is responsible for managing all elements of
service provision in accordance with the participant’s service plan, including taking into account
any directives contained within the service plan regarding how and when the service is to be
furnished and the expressed preferences of the participant.
Participant-directed means that the participant has the authority to manage some or all aspects of
service provision as provided in Appendix E (Participant Direction of Services). A service may
only be specified as participant-directed when the waiver makes available the participant
direction opportunities that are specified in Appendix E. When a service may be participantdirected, it also must be listed in the table in Item E-1-g in Appendix E where the type of
participant direction opportunity (or opportunities) that is employed in conjunction with the
service is indicated. In the web-based application, each service that is specified as participantdirected is automatically listed in Item E-1-g. There is no limitation on the number of waiver
services that may be participant directed. When a service may be either provider-managed or
participant-directed, the participant may decide which service delivery method to employ.
CMS Review Criteria
CMS applies the following criteria when reviewing each service in Appendix C-3:
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CMS Review Criteria
•
•
•
•
•
•
•
•
•
•
•
•

Each service is separately defined.
The service does not duplicate coverage under the state plan.
When the waiver serves individuals under age 21, the service does not duplicate a service
that can be provided under the state plan as services required under EPSDT.
The service definition clearly delineates the purpose and the scope of the service.
The scope of the service does not span multiple, unrelated services, although similar or
related services may be combined.
When the scope of a service potentially overlaps with the scope of another service, there
are mechanisms that prevent duplicate billing.
In the case of non-statutory services, the service is necessary to avoid institutionalization
and address functional impairments or other participant needs that, if left unaddressed,
would prevent the person from engaging in everyday community activities.
Any limits on the amount, duration and frequency for the service are consistent with
assuring health and welfare for the target population.
Provider qualifications are specified for each service and are appropriate to the nature and
type of the service.
Provider qualifications include requirements for training, experience and education that
are sufficient to ensure that waiver participants will receive services in a safe and effective
manner.
Provider qualifications do not include requirements that would unnecessarily restrict the
number of providers, including unnecessarily restricting the provision of a service to
agency providers.
For personal care services, the following details must be provided:
• Requirements regarding training hours and availability of continuing education,
and whether such training is state sponsored, are highlighted for PCAs and other
PCS providers.
• States should maintain a listing of qualified PCA/PCS staff and make the list
available to individuals and families.
• PCS providers must be regularly monitored and supervised by the agency and/or
waiver participant in accordance with state policies.

Appendix C-4: Additional Limits on Amount of Waiver Services
Overview
In Appendix C-3, a state specifies the limits (if any) on the amount, frequency and duration that
apply to each specific waiver service, including a dollar limit. In this Appendix, a state may
specify dollar limits that apply to a set (or sets) of waiver services (two or more services in
combination). A state also may establish limits on the maximum dollar amount of waiver goods
and services that is authorized in a participant’s service plan. Sometimes such limits are termed
“budget allocations.” Dollar limits on the overall amount of services that apply after entrance to
the waiver are distinguished from the individual cost limit (specified in Appendix B-2) that a
state may apply in determining whether to enroll or maintain an individual in the waiver. For
example, when a state does not impose an individual cost limit, it still may subject service plans
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to overall dollar limits post-entrance to the waiver. Since limits on sets of services or dollar
limits on the overall dollar amount of a service plan constitute limits on the amount of services,
the state must specify in the waiver any such limits that apply. If the limit is only applicable to
one service, that limit should be identified in the limitation section of the service specification in
Appendix C-3.
Types of Limits
The appendix pre-identifies three types of limits that a state might employ:
•

Limits on Sets of Services. This type of dollar limit is applied to two or more waiver
services, usually services that are closely related or might serve as substitutes for one
another (e.g., personal care and chore services). A state may define several sets or
groupings of services to which dollar limits apply.

•

Prospective Individual Budget Amount. Some states have developed and implemented
methodologies that determine a specific budget amount that is uniquely assigned to each
individual waiver participant. The assigned budget amount constitutes a limit on the overall
amount of services that may be authorized in the service plan. This method is termed
“prospective” because the amount that is assigned is determined in advance of the
development of the participant’s service plan.

•

Budget Limit by Level of Support. Other states have developed and implemented
methodologies that group waiver participants who share similar characteristics or support
needs. States assign budget limits to each of these levels or participant groupings. These
limits specify the maximum dollar amount of waiver goods and services that may be
included in the service plans of participants who fall into each level or grouping.

Other approaches also have been implemented by states. For example, some states have
established “baseline” budget allocations that apply to all waiver participants but provide for
stepping-up the baseline allocation in certain pre-defined circumstances.
When a state also provides for the participant direction budget authority opportunity (in
Appendix E), there may be a relationship between the participant-directed waiver budget and the
budget allocation methods described here. This appendix addresses limits that apply to all waiver
participants, regardless of whether the waiver provides for participant direction. If the waiver
only provides for the use of individual budgets when participants have budget authority as
provided in Appendix E, then this appendix does not apply. The methods for how self-directed
budgets are developed would be described only in Appendix E.
Applicability
This Appendix needs to be completed whenever a state imposes a dollar limit on the amount of
waiver services that may be authorized in a service plan over and above any limits on amount,
duration and frequency that apply to individual waiver services. The “not applicable” selection
should be made only when no such dollar limits are applied. If one of the pre-identified
selections does not appropriately describe the dollar limits that the state applies, select “other”
and describe the dollar limit that is imposed.
Basic Information Requirements
Regardless of the type of limit that is applied to waiver services, certain basic information needs
to be provided, including:
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(a) The waiver services to which the limit applies. A budget limit, for example, might be
applied to all waiver services or, alternatively, some services (e.g., crisis services) may be
excluded from the limit and furnished in amounts necessary outside the budget.
(b) The basis of the limit, including its basis in historical expenditure/utilization patterns and,
as applicable, the processes and methodologies that are used to determine the amount of
the limit to which a participant’s services are subject. When dollar limits are imposed,
CMS expects that the amount of the limit will be based on evidence that the limit is a
realistic estimate of the expected amount of services that waiver participants are likely to
require. Limits may not be arbitrary or lack foundation in observed experience. The
methodology that is employed to determine the amount of the limit must be fully
described. When the amount of the limit is based on assessment information or other
factors, how such information is used to determine the limit should be fully explained.
(c) How the limit will be adjusted over the course of the waiver period. Describe whether the
limit will be adjusted to take into account cost increases and/or whether the methodology
will be periodically re-evaluated in light of changes in utilization patterns or other factors.
(d) Provisions for adjusting or making exceptions to the limit based on participant health and
welfare needs or other factors specified by the state. Especially in the case of limits on
the overall amount of waiver services that may be authorized in a service plan, describe
the conditions under which the limit may be adjusted to assure participant health and
welfare.
(e) The safeguards that are in effect when the amount of the limit is insufficient to meet a
participant’s needs. Such safeguards may include referring the participant for enrollment
in another waiver program where more resources may be available.
(f) How participants are notified of the amount of the dollar limit. Because a dollar limit
constitutes a limitation on the amount of waiver services that a participant may receive, it
is important that the participant be made aware of the limit.
In the case of some types of limits, additional information is required, as discussed below.
Whenever dollar limits of the types addressed in this Appendix are employed, the state must
afford participants the opportunity to request a Fair Hearing in the event that they are denied
waiver services as a result of a dollar limit.
Additional Information Requirements
As previously noted, certain additional information requirements attach to specific types of
limits. In particular:
Limit(s) on Set(s) of Waiver Services
In addition to the basic information specified above, explain the basis for the grouping of
services in each set. As a general matter, the services in a set should address participant needs
that are reasonably related. For example, clinical services might be grouped separately from
daily support services such as chore and homemaker services.
Prospective Individual Budget Amount
In addition to the basic information specified above:
•

Specify the entity that determines the budget amount;
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•

•
•

Include a complete description of the participant-related factors that are taken into
account when determining the budget amount and how these factors affect the individual
budget amount. If assessment results are used in determining the budget amount, specify
the types of assessments that are employed;
If the budget amount varies geographically, explain the basis for adjusting the budget
based on participant location; and
Describe how the methodology that is employed is open for public inspection. When a
formula is employed to determine the individual budget amount, the numeric values that
are inserted into the formula need not be disclosed as part of public inspection.

Budget Limits by Level of Support
In addition to the basic information specified above, describe:
•
•

•
•

The levels of support or groupings that have been established and the basis for these
groupings;
The procedures that are followed to assign participants to a level of support or participant
grouping, including the entity or entities responsible for determining the assignment of
individuals. If assessment results are used to assign individuals to groupings, specify the
types of assessments that are employed;
Whether the budget limit varies geographically and, if applicable, the factors that are
used to adjust budget amounts based on geographic considerations; and
How the state makes its methodology for determining budget limits by level of support
open for public inspection. When a formula is employed to determine the budget amount,
the numeric values that are inserted into the formula need not be disclosed as part of
public inspection.

Other Type of Limit
In addition to the basic information specified above:
•
•

Fully describe the limit and its basis; and
To the extent that the limit combines elements of the other types of limits addressed in
this Appendix, include the additional information associated with those types of limits.
For example, if the limit is structured by sets of services but also includes limits based on
level of support within each set, include information about how individuals are assigned
to each level of support.

CMS Review Criteria
When reviewing this Appendix, CMS applies the following review criteria:

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CMS Review Criteria
General Criteria:
•
•
•
•
•
•
•

The waiver specifies the services to which the limit applies.
The method of determining the limit is objective and evidence based (e.g., the method
of determining the individual budget amount is based on the analysis of historical costs
and utilization and other factors that are likely to affect costs).
The waiver specifies the processes that are used to determine the amount of the limit to
which a participant’s services are subject.
The waiver specifies how the amount of the limit is adjusted during the period that the
waiver is in effect.
The waiver contains provisions for adjusting or making exceptions to the limit based
on participant health and welfare needs or other factors specified by the state. Any
criteria that are applied to adjust the budget are clear and explicit.
The waiver specifies safeguards that are in effect when the amount of the limit is
insufficient to meet a participant’s needs.
The waiver provides for notifying participants of the amount of the limit to which their
waiver services are subject.

Criteria Applicable to Specific Types of Limits
Limit(s) on Set(s) of Waiver Services
The services in the set to which the limit applies are reasonably related to one another.

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Prospective Individual Budget Amount
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•
•
•
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The waiver specifies the assessment and other participant information upon which the
individual budget amount is based.
The waiver explains how assessment and other participant information is employed in
determining he individual budget amount.
The entity responsible for determining the individual budget amount is identified.
If geographic factors affect the budget amount, the waiver explains how such
adjustments are made.
The waiver specifies how the methodology for determining the individual budget
amount is open for public inspection.

Budget Limits by Level of Support
•
•
•
•
•
•

The waiver specifies the levels of support or participant groupings that have been
established and the basis for such groupings.
The waiver specifies the procedures that are followed to assign participants to a level of
support or participant grouping.
The waiver specifies the entities responsible for determining the assignment of
individuals by level of support.
When assessment results are used to assign individuals to groupings, the waiver
specifies the types of assessments that are employed.
If geographic factors affect the budget amount, the waiver explains how such
adjustments are made.
The waiver specifies how the methodology for determining the budget limit based on
level of support amount is open for public inspection.

Other Type of Limit
Based on the nature of the other type of limit that is used, any of the foregoing criteria may
apply.

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Appendix C-5: Home and Community-Based Settings Requirements
Overview
Since April 2008, CMS has engaged in ongoing discussions with stakeholders, states and federal
partners about the qualities of community-based settings that distinguish them from institutional
settings. As part of this stakeholder engagement, CMS issued a 1915(c) Waiver Advanced
Notice of Proposed Rule Making (ANPRM) and various proposed rules relating to home and
community-based services authorized by different sections of the Medicaid law, including
1915(c) HCBS waivers, 1915(i) State Plan HCBS and 1915(k) Community First Choice State
Plans. CMS’ definition of home and community-based settings has benefited from and evolved
as a result of this stakeholder engagement.
In final rules published on January 16, 2014, CMS moved away from defining home and
community-based settings by “what they are not,” and toward defining them by the nature and
quality of individuals’ experiences. The home and community-based setting provisions in the
final rules established a more outcome-oriented definition of home and community-based
settings, rather than one based solely on a setting’s location, geography, or physical
characteristics. The purpose of the home and community-based settings requirements under 42
CFR § 441.301(c)(4) is to maximize the opportunities for participants in HCBS programs to have
access to the benefits of community living and to receive services in the most integrated setting.
The requirements effectuate the law’s intention for Medicaid HCBS to provide alternatives to
services provided in institutions. States’ implementation of these requirements will contribute
significantly to the quality and experience of participants in Medicaid HCBS waiver programs
and will further expand their opportunities for meaningful community integration in support of
the goals of the Americans with Disabilities Act and the Supreme Court’s decision in Olmstead
v. L.C.
Instructions
In this section of the waiver application, states are to document state compliance with the final
regulations published on January 16, 2014, regarding the (HCBS settings requirements at 42
CFR § 441.301(c)(4)-(5). In this section, states are to specify and describe the types of settings
in which waiver services are received. Only the types of settings are required to be included in
the description, and not the title/name for each specific setting. Also include in the description
the process that the state will use to assess each setting (each individual setting and not each
setting type) to ensure that each setting meets the federal HCBS settings requirements at 42 CFR
§ 441.301(c)(4)-(5) at the time of submission to CMS, as well as how the state will ensure that
all settings will continue to meet the HCBS settings requirements as a part of ongoing
monitoring. Please include a detailed explanation of how the state will perform ongoing
monitoring across residential and non-residential settings in which individuals receive HCBS.
Technical Guidance
The HCBS settings requirements support home and community-based settings that serve as an
alternative to institutional care and that take into account the quality of individuals’ experiences.
They require that all home and community-based settings meet certain qualifications in
accordance with 42 CFR § 441.301(c)(4)(i)-(v), including, at a minimum:

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•

Is integrated in and supports full access to the greater community, including
opportunities to seek employment and work in competitive integrated settings, engage
in community life, control personal resources, and receive services in the community, to
the same degree of access as individuals not receiving Medicaid HCBS;

•

Is selected by the individual from among setting options, including non-disability
specific settings and an option for a private unit in a residential setting. The setting
options are identified and documented in the person-centered service plan and are based
on the individual's needs, preferences, and, for residential settings, resources available
for room and board;

•

Ensures individual rights of privacy, dignity and respect, and freedom from coercion
and restraint;

•

Optimizes, but does not regiment, individual initiative, autonomy and independence in
making life choices; including but not limited to, daily activities, physical environment,
and with whom to interact;

•

Facilitates choice regarding services and who provides them.

The regulation at 42 CFR § 441.301(c)(4)(vi)(A)-(E) also includes additional requirements for
provider-owned or controlled home and community-based residential settings. A provider-owned
or controlled setting is a setting that is owned, co-owned, operated and/or controlled by a
provider of home and community-based services. A setting is provider-owned or controlled if the
selection of a setting limits an individual’s selection of a waiver service provider in that setting
or if a waiver service provider plays a role in an individual’s ability to select a particular setting
in which to receive services. A setting is provider-controlled when a provider has influence over
whether an individual is accepted for residency as well as when the landlord has influence over
which service providers the individual in the setting uses. These requirements include ensuring:
•

The individual has a lease or other legally enforceable agreement providing similar
protections. The unit or dwelling is a specific physical place that can be owned, rented,
or occupied under a legally enforceable agreement by the individual receiving services,
and the individual has, at a minimum, the same responsibilities and protections from
eviction that tenants have under the landlord/tenant law of the state, county, city, or other
designated entity. For settings in which landlord tenant laws do not apply, the state must
ensure that a lease, residency agreement or other form of written agreement will be in
place for each HCBS participant, and that the document provides protections that address
eviction processes and appeals comparable to those provided under the jurisdiction's
landlord tenant law.

•

The individual has privacy in their sleeping or living unit including:
o Units have entrance doors lockable by the individual, with only appropriate staff
having keys to doors.
o Individuals sharing units have a choice of roommates in that setting.
o Individuals have the freedom to furnish and decorate their sleeping or living units
within the lease or other agreement.

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•
•
•

The individual has the freedom and support to control his/her own schedule and
activities, including access to food at any time;
The individual can have visitors of their choosing at any time; and
The setting is physically accessible to the individual.

In accordance with 42 CFR § 441.301(c)(4)(vi)(F), any modification to these additional
requirements for provider-owned home and community-based residential settings must be
supported by a specific assessed need and justified with documentation in the person-centered
service plan including the following:
•
•
•
•
•
•
•
•

Identify a specific and individualized assessed need.
Document the positive interventions and supports used prior to any modifications to the
person-centered service plan.
Document less intrusive methods of meeting the need that have been tried but did not
work.
Include a clear description of the condition that is directly proportionate to the specific
assessed need.
Include regular collection and review of data to measure the ongoing effectiveness of the
modification.
Include established time limits for periodic reviews to determine if the modification is
still necessary or can be terminated.
Include the informed consent of the individual.
Include an assurance that interventions and supports will cause no harm to the individual.

The regulations at 42 CFR § 441.301(c)(5) excludes certain settings as permissible settings for
the provision of Medicaid home and community-based services. These excluded settings include
nursing facilities, institutions for mental disease, intermediate care facilities for individuals with
intellectual disabilities, and hospitals. Other Medicaid funding authorities support services
provided in these institutional settings.
The regulations at 42 CFR § 441.301(c)(5)(v) also identify other settings that are presumed to
have institutional qualities, and do not meet the threshold for Medicaid HCBS. These settings
include:
•
•
•

any setting that is located in a building that is also a publicly or privately-operated facility
that provides inpatient institutional treatment,
any setting that is located in a building on the grounds of, or immediately adjacent to, a
public institution, or
any other setting that has the effect of isolating individuals receiving Medicaid HCBS
from the broader community of individuals not receiving Medicaid HCBS.

If states seek to include such settings in a 1915(c) waiver, CMS will make a determination
through heightened scrutiny, based on information presented by the state demonstrating that the
setting is home and community-based and does not have the qualities of an institution. This
process is intended to be transparent and therefore, must include input and information from the
public.

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Settings that Isolate
Some settings have the effect of isolating individuals receiving HCBS from the broader
community. As described in the State Medicaid Director’s Letter #19-001 issued on March 22,
2019 (in Attachment C), CMS intends to take the following factors into account in determining
whether a setting may have the effect of isolating individuals receiving Medicaid HCBS from the
broader community of individuals not receiving HCBS:
• Due to the design or model of service provision in the setting, individuals have limited,
if any, opportunities* for interaction in and with the broader community, including with
individuals not receiving Medicaid-funded HCBS;
• The setting restricts beneficiary choice to receive services or to engage in activities
outside of the setting; or
• The setting is physically located separate and apart from the broader community and
does not facilitate beneficiary opportunity to access the broader community and
participate in community services, consistent with a beneficiary’s person-centered
service plan.
* “Opportunities”, as well as identified supports to provide access to and participation in
the broader community, should be reflected in both individuals’ person-centered service
plans and the policies and practices of the setting in accordance with 42 CFR §§ 441.301(c)(1)(3) and (4)(vi)(F), 42 CFR §§ 441.530(a)(1)(vi)(F) and 441.540, and 42 CFR
§§ 441.710(a)(1)(vi)(F) and 441.725.
With the March 17, 2023 expiration of the transition period for states to comply with the HCBS
settings criteria, the waiver application becomes the documentation of a state’s ongoing
monitoring procedures to ensure continued provider compliance. States should include a detailed
explanation of how they will perform ongoing monitoring across residential and non-residential
settings in which individuals receive HCBS.
More information regarding the home and community-based setting requirements is available on
the CMS website at:
https://www.medicaid.gov/medicaid/hcbs/guidance/index.html
CMS Review Criteria
The state’s description of settings in which HCBS are received demonstrates how the state will
ensure that all HCBS settings requirements at 42 CFR § 441.301(c)(4)-(5) will be met and
includes:
• A list of the setting types in which waiver services are received;
• The process that the state Medicaid agency used to assess and determine that all settings
meet the HCBS settings requirements at the time of submission; and
• The process that the state Medicaid agency will use to ensure that all settings will continue
to meet the HCBS settings requirements as part of on-going monitoring.
Attachment: Core Service Definitions
Overview
This attachment contains core waiver service definitions that states may adapt when completing
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Appendix C-3 (waiver service specification template) in the waiver application. Many of these
definitions are based on the service definitions contained in the 1995 standard waiver application
format. Definitions of additional services also are included. The definitions are listed in the
following order: (a) statutory services; (b) other services; (c) extended state plan services; and (d)
services in support of participant direction. The “core definitions” specify the essential scope of
each service. States may modify or supplement the core definition in order to more precisely
reflect the nature and scope of each service included in a waiver. For example, if a core service
definition includes an activity that a state does not wish to provide, the activity may be removed.
The definitions are accompanied by instructions that specify coverage parameters that should be
addressed in the service definition. Also, as appropriate, guidance is included concerning
service coverage.
As noted in the instructions, states are not required to use these core service definitions. A state
may propose an alternate definition. However, each service must be fully described and not
described in open-ended terms. Alternate definitions will be reviewed by CMS to determine
whether the scope and nature of the service as defined is consistent with regulatory definitions,
as applicable, and waiver service coverage policy.
In addition, a state may propose to cover services beyond those that are included here. When
coverage of another service is proposed, CMS will review the proposed coverage to ensure that
the service is necessary in order to avoid institutionalization and addresses participant needs that
stem from their disability or condition.
In Appendix C-3 of the waiver application, separate provision has been made for specifying
limitations on the amount, frequency and duration of waiver services (e.g., limiting respire care
to no more than 720 hours in a year). Such limitations should not be incorporated in the service
definition itself but instead specified in the appropriate location in the waiver service
specification template. However, limitations on the scope of the service should be included in
the definition. For example, if a service (e.g., personal assistance) is available only to
participants who reside in their own private residence, the limitation should be reflected in the
service definition. Similarly, any additional criteria that apply to the provision of a service also
should be incorporated into the definition (e.g., the provision of a service requires the
determination by a professional that the service is necessary to address specific participant
needs). Also, do not include provider qualifications in the service definition. Provider
qualifications are specified separately in the Appendix C-3 waiver service specification template.
A. Statutory Services
Statutory services are services specifically identified in section 1915(c) of the Act and 42 CFR §
440.180. They also are listed in the Appendix C1/C3 Service Specification section of the webbased application. Core service definitions are provided for each of these services. Where the
definition is based in regulation, a citation is included. Otherwise, the definition represents a
suggestion. As discussed in the instructions for Appendix C-1, a waiver is considered to cover
an identified statutory service as long as the state’s definition aligns with the core service
definition included here, even though an alternate title is used (e.g., support coordination instead
of case management or attendant care instead of personal care).
1. Case Management
Background
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Case management services are an optional benefit that a state may furnish under its state plan, as
provided in 42 CFR § 440.169. Case management services are also identified as 1915(c) waiver
home and community-based services at 42 CFR § 440.180(b)(1).
Core Service Definition
Services that assist participants in gaining access to needed waiver and other state plan
services, as well as medical, social, educational, and other services, regardless of the
funding source for the services to which access is gained.
Instructions
•
•

•

When case managers perform other activities/functions (e.g., crisis response) that are not
included in the core definition, specify the additional activities/functions.
When case managers are responsible for the ongoing monitoring of the provision of
services included in the participant’s service plan and/or participant health and welfare,
include a statement to that effect in the service definition.
When case managers are responsible for initiating the process to evaluate and/or reevaluate the individual's level of care and/or the development of service plans as
specified in Appendices B & D of the application, include a statement to that effect in the
service definition.
When the state claims the cost of case management furnished to institutionalized
individuals prior to their transition to the waiver (as provided in State Medicaid Director
letter Olmstead Update No.3 (see Attachment C), include a statement to that effect in the
service definition. Specify the period that such services may be furnished. Providers may
not bill for this service until the date of the person’s entry into the waiver program.
When case management includes providing supports to assist participants to direct their
services, specify the types of supports that case managers furnish. For example, a case
manager may have responsibility for monitoring the expenditure of funds included in the
participant-directed budget when the Budget Authority opportunity is provided under the
waiver.
In the provider qualifications section, include requirements for training on the HCBS
settings regulation and person-centered service planning requirements.

Guidance
•

•

When case management is furnished as a waiver service, a state may not limit the
providers of case management to specific classes of entities (e.g., county human services
agencies). All willing and qualified providers must be offered a provider agreement in
accordance with 42 CFR § 431.107. Participants must be able to select from among all
qualified providers in accordance with section 1902(a)(23) of the Act.
When activities related to the assessment of level of care and service plan development
are furnished as waiver case management activities, payment for such services may not
be made until the individually is actually enrolled in the waiver.
The scope of case management services may not include activities/services that constitute
the provision of direct services to the participant that normally are covered as distinct
services.
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Case management must comport with conflict of interest requirements at 42 CFR §
441.301(1)(vi) and in accordance with Appendix D-1-b.

2. Homemaker Services
Background
Homemaker services are identified as 1915(c) waiver home and community-based services at 42
CFR § 440.180(b)(2). There is no specific regulatory definition of homemaker services.
Core Service Definition
Services that generally consist of the performance of household tasks (e.g., meal preparation
and routine household care) provided by a qualified homemaker, when the individual
regularly responsible for these activities is temporarily absent or unable to manage the
home and care for him or herself or others in the home.
Instructions
•
•

If homemaker services include other activities/functions that are not reflected in the core
definition, modify the core definition to specify the activities/ functions.
If homemaker services are limited to the performance of a specific household task(s), list
the specific task(s) in the definition.

Guidance
•

•

Homemaker services are generally distinguished from personal care services. Personal
care services include assistance in activities of daily living whereas homemaker services
usually are confined solely to the performance of household tasks.
The core service definition may be modified to include the performance of “chore-type”
services by a homemaker.

3. Home Health Aide Services
Background
Home health services are a mandatory state plan service defined at 42 CFR § 440.70, within
which home health aide services are a component of the state plan coverage. Home health aide
services are also identified as 1915(c) waiver home and community-based services at 42 CFR §
440.180(b)(3). In a waiver, a state may elect to furnish home health aide services that are
different in their scope and nature than the services offered under the state plan. Alternatively, if
there are limitations on the amount, frequency and duration of the provision of home health aide
services in the state plan, a state may elect to provide additional services over and above those
permitted under the state plan. Two alternative core service definitions are provided depending
on how the state elects to cover home health aide services under the waiver:
Core Service Definition (Services differ in scope and nature from the state plan):
Services defined in 42 CFR § 440.70 that are provided in addition to home health aide
services furnished under the approved state plan. Home health aide services under the
waiver that are different in nature, scope, supervision arrangements, or provider type
(including provider training and qualifications) from home health aide services in the state
plan. The differences from the state plan are as follows:
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Core Service Definition (Extended State Plan Service):
Services defined in 42 CFR § 440.70 that are provided when home health aide services
furnished under the approved state plan limits are exhausted. The scope and nature of these
services do not differ from home health aide services furnished under the state plan.
Services are defined in the same manner as provided in the approved state plan. The
provider qualifications specified in the state plan apply. The additional amount of services
that may be provided through the waiver is as follows:(specify)
Instructions
•

•

If the only difference between the coverage of home health aide services under the state
plan and the waiver is that waiver services supplement state plan services over and above
state plan limitations on amount, duration and frequency, use the home health aide
services “extended state plan service” definition above. For example, if the state plan
limits home health aide services to no more than ten visits per month but the state wishes
to provide for additional visits for waiver participants, use the extended state plan service
definition. Specify the additional services that are provided when the state plan benefit is
exhausted.
When the scope and nature of home health aide services under the waiver differ from the
coverage under the state plan, use the first core definition and specify how the scope and
nature of services differs from the state plan, including the other activities/functions that
home health aides perform in addition to those specified under the state plan.

Guidance
•
•

•

If home health aide services may be furnished outside the participant’s home, include a
statement to that effect in the service definition.
One source of difference between the coverage of home health aide services under the
state plan and the waiver may arise from provider qualifications. Home health services
(including home health aide services) under the state plan may only be furnished by home
health agencies that meet the requirements for participation in Medicare, as. provided in
42 CFR § 489.28.
The coverage of home health aide services under a waiver does not permit a state to
restrict access by waiver participants to home health services that are offered under the
state plan. Waiver participants are entitled to receive all benefits for which they are
eligible under the state plan.
Home health aide services that can be covered under the state plan should be furnished to
waiver participants under age 21 as services required under EPSDT rather than through
the waiver.

4. Personal Care
Background
Personal care services are an optional benefit that a state may furnish under its state plan, as
provided in 42 CFR § 440.167. Personal Care Services are also identified as 1915(c) waiver
home and community-based services at 42 CFR § 440.180(b)(4). A state may offer personal
care under a waiver when: (a) it does not offer personal care under its state plan; (b) its coverage
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under the waiver differs in scope and nature from the coverage under the state plan; or (c) the
state wishes to furnish personal care services in an amount, duration or frequency that exceed the
limits in the state plan. Two core service definitions are provided:
Core Service Definition (Services differ in scope and nature from personal care under the state
plan or personal care is not provided under the state plan):
A range of assistance to enable waiver participants to accomplish tasks that they would
normally do for themselves if they did not have a disability. This assistance may take the
form of hands-on assistance (actually performing a task for the person) or cuing to prompt
the participant to perform a task. Personal care services may be provided on an episodic or
on a continuing basis. Health-related services that are provided may include skilled or
nursing care and medication administration to the extent permitted by state law.
Core Service Definition (Extended State Plan Service):
Services that are provided when personal care services furnished under the approved state plan
limits are exhausted. The scope and nature of these services do not differ from personal care
services furnished under the state plan. The provider qualifications specified in the state plan
apply. The additional amount of services that may be provided through the waiver is as follows:
(specify)Instructions
•

•
•

•

•
•

If personal care under the waiver is furnished to supplement personal care under the state
plan but otherwise the scope of the coverage and who may provide the service is the same
as under the state plan, use the “extended state plan service” core definition. Specify the
additional amount of services that may be provided under the waiver.
When personal care services are not provided under the state plan, use the first core
definition.
When personal care is covered under the state plan but the scope and nature of personal
care furnished to waiver participants differs from the state plan, also use the first core
definition and include the following statement: “Personal care under the waiver differs
in scope, nature, supervision arrangements, and/or provider type (including provider
training and qualifications) from personal care services in the state plan.” Also, briefly
describe the differences between the waiver coverage and the state plan coverage.
When the first core definition is used, as appropriate, supplement the core definition by
specifying the types of assistance furnished. Such assistance may include assistance in
performing ADLs (bathing, dressing, toileting, transferring, maintaining continence) and
IADLs (more complex life activities, e.g., personal hygiene, light housework, laundry,
meal preparation, transportation, grocery shopping, using the telephone, medication and
money management). Such assistance also may include the supervision of participants as
provided in the service plan.
If personal care is furnished outside the participant’s home, include a statement to that
effect in the first core definition.
A state may elect to make retainer payments to personal assistants when the waiver
participant is hospitalized or absent from his/her home for a period of no more than 30days. See CMS State Medicaid Director letter Olmstead Update #3 (July 25, 2000) in
Attachment C for additional information. If the state elects to make such payments,
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•
•

describe the circumstances under which such payments are authorized and applicable
limits on their duration. For waivers offering participant direction, states may permit the
use of the retainer to afford direct support workers time off from providing services to
their employer.
Also, with respect to the first core definition, when individuals who are not employed by
a provider agency may provide personal care, the service definition must specify who
oversees and supervises these individual providers (e.g., a registered nurse, case manager,
and/or the participant), and the frequency of supervision.
When personal care may be participant-directed, specify in the service definition the
responsibilities and authority of the participant to direct the delivery of personal care.
Personal care may be furnished to escort participants to participate in community
activities or access other services in the community if the state explains how it is
incidental to the personal care service in the service definition, and the costs for the
transportation are specified as a subcomponent of the personal care service in the
Appendix J Factor D charts. However, any transportation costs that are not associated
with the provision of personal care are not personal care services and thus, would have to
be billed separately and may not be included in the scope of personal care. Personal care
aides may furnish and bill separately for transportation provided that they meet the state’s
provider qualifications for transportation services, whether medical transportation under
the state plan or non-medical transportation under the waiver.

Guidance
•
•

•

•
•
•

Alternate service titles may be employed for personal care, including personal assistance
and attendant care.
It is not necessary to reflect in the service definition pertinent policies that apply to the
provision of personal care by legally responsible individuals or other family
members/legal guardians. These topics are addressed in the responses to Items C-2-d and
C-2-e in Appendix C-2 of the application.
The scope of personal care may include performing incidental homemaker and chore
services tasks. However, such activities may not comprise the entirety of the service.
When personal care services includes incidental homemaker and chore tasks, the state
must have mechanisms in place to ensure against duplication of payment if
homemaker/chore services are also a separate or component of another Medicaid service.
When personal care is included in the scope of another covered service (e.g., residential
habilitation or assisted living), a state may prohibit concurrent provision of personal care
as a distinct additional service when the participant receives the other service that
includes personal care.
Personal care may be furnished in order to assist a person to function in the workplace or
as an adjunct to the provision of employment services.
When personal care services are offered under the state plan, a state may not restrict the
access of waiver participants to such services.
Personal care services that can be covered under the state plan should be furnished to
waiver participants under the age of 21 as services required under EPSDT.
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5. Adult Day Health
Background
Adult day health services are identified as home and community-based services at 42 CFR §
440.180(b)(5). There is no specific regulatory definition of adult day health services.
Pursuant to the general prohibition on coverage of room and board outlined at section 1915(c)
of the Act, meals provided as part of adult day health services may not constitute a "full
nutritional regimen" (i.e., up to 2 meals per day and which do not constitute a full nutritional
regimen is permitted).
Core Service Definition
Services generally furnished 4 or more hours per day on a regularly scheduled basis, for one
or more days per week, or as specified in the service plan, in a non-institutional, communitybased setting, encompassing both health and social services needed to ensure the optimal
functioning of the participant. Meals provided as part of these services may not constitute a
"full nutritional regimen" (i.e., up to 2 meals per day and which do not constitute a full
nutritional regimen is permitted).
Instructions
• Supplement or modify the core definition as appropriate to encompass specific service
elements/activities furnished as adult day health under the waiver.
• If physical, occupational and/or speech/language therapies included in the participant’s
service plan are furnished as components of this service, include a statement to that effect
in the definition.
• If transportation between the participant's place of residence and the adult day health site
is provided as a component of adult day health services and the cost of this transportation
is included in the rate paid to adult day health providers, include a statement to that effect
in the definition.
• While adult day health services generally are provided for four or more hours per day,
they may be furnished for fewer hours. It also is not required that participants receive
adult day health services each day.
Habilitation Services
General Guidance
Habilitation services are identified as home and community-based services at 42 CFR §
440.180(b)(6). Habilitation may be covered as a distinct waiver service. Usually, coverage of
habilitation takes the form of the coverage of day and residential habilitation as separate services.
In addition, states may cover enhanced habilitation services (supported employment, education,
and prevocational services) as described in regulation at 42 CFR § 440.180(c). In general, when
enhanced habilitation services are covered, they need to be covered as distinct services rather
than combined as a single service. Core definitions are provided for habilitation, residential
habilitation, day habilitation, prevocational, supported employment, and education.
While habilitation is frequently identified with the provision of services to persons with
intellectual disability and other related conditions, habilitation services (including enhanced
habilitation services) may be furnished to other target groups (e.g., persons who have
experienced a brain injury) who may benefit from them.
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6. Habilitation
Background
Habilitation services are defined in section 1915(c)(5) of the Act as services designed to assist
individuals in acquiring, retaining, and improving the self-help, socialization, and adaptive skills
necessary to reside successfully in home and community based settings.
Core Service Definition
Services designed to assist participants in acquiring, retaining and improving the self-help,
socialization and adaptive skills necessary to reside successfully in home and community-based
settings.
Instructions
• Supplement or modify the core definition as appropriate to specify the specific service
elements/activities that are furnished as habilitation under the waiver.
• Specify the settings in which habilitation is furnished.
Guidance
• Habilitation may be furnished in a home or other community setting.
• When habilitation is provided as a single service (rather than broken down into
component parts), in accordance with section 1902(a)(23) of the Act, the provider
qualifications specified must not have the effect of unnecessarily limiting the providers of
the service.
• Retainer payments may be made to providers of habilitation while the waiver participant
is hospitalized or absent from his/her home for a period of no more than 30-days. See
CMS State Medicaid Director letter Olmstead Update #3 (July 25, 2000) in Attachment C
for additional information. If the state elects to make such payments, describe the
circumstances under which such payments are authorized and applicable limits on their
duration. Such payments are not permissible when the state has included a cost-center in
the rate paid to providers to address absences.
7. Residential Habilitation
Background
There is no specific regulatory definition for residential habilitation, but generally it involves
individually tailored supports available in a provider-owned or controlled residential setting or a
participant’s own home that assist with the acquisition, retention, or improvement in skills
related to living in the community. Pursuant to the general prohibition on coverage of room and
board outlined at section 1915(c) of the Act, payment may not be made for residential
habilitation for the cost of room and board, including the cost of building maintenance, upkeep
and improvement. The method by which the costs of room and board are excluded from
payment for residential habilitation is specified in Appendix I-5.
Core Service Definition
Individually tailored supports that assist with the acquisition, retention, or improvement in
skills related to living in the community. These supports include adaptive skill development,
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assistance with activities of daily living, community inclusion, transportation, adult
educational supports, social and leisure skill development, that assist the participant to
reside in the most integrated setting appropriate to his/her needs. Residential habilitation
also includes personal care and protective oversight and supervision.
Payment may not be made for the cost of room and board, including the cost of building
maintenance, upkeep and improvement. Payment is not made, directly or indirectly, to
members of the individual's immediate family, except as provided in Appendix C-2.
Instructions
• Supplement or modify the core definition as appropriate to encompass the specific
service elements/activities furnished as residential habilitation.
• Residential habilitation may be furnished in the following living arrangements:
participant’s own home, the home of a relative, a semi-independent or supported
apartment or living arrangement, or a group home. Supplement the core definition by
specifying the types of settings where residential habilitation is furnished.
Guidance
• Residential habilitation services may be provided in the participant’s living arrangement
or in the surrounding community, provided that such services do not duplicate services
furnished to a participant as other types of habilitation.
• Provider owned or leased facilities where residential habilitation services are furnished
must be compliant with the Americans with Disabilities Act of 1990, 42 U.S.C. § 12101
et seq. (1990).
• Home accessibility modifications when covered as a distinct service under the waiver
may not be furnished to individuals who receive residential habilitation services except
when such services are furnished in the participant’s own home. Compensation for the
costs of life safety code modifications and other necessary accessibility modifications
that a provider makes may be included in provider rate (as amortized costs) so long as
they are necessary to meet the needs of residents and are not basic housing costs.
• Residential habilitation services may include the provision of medical and health care
services that are integral to meeting the daily needs of residents (e.g., routine
administration of medications by nurses or tending to the needs of residents who are ill or
require attention to their medical needs on an ongoing basis). The provision of such
routine health services and the inclusion of the payment for such services in the payment
for residential habilitation services is not considered to violate the requirement at 42 CFR
§ 440.180 that a waiver may not cover services that are available through the state plan.
Medical and health care services such as physician services that are not routinely
provided to meet the daily needs of residents may not be included.
• Personal care/assistance or other similar services may be a component part of residential
habilitation services but may not comprise the entirety of the service. When personal
care or another similar service is covered as a distinct waiver service but also is furnished
as a component of residential habilitation, in accordance with the Improper Payments
Elimination and Recovery Act of 2010, there must be mechanisms that prevent the
duplicative billing of the provision of personal care services.
• If transportation between the participant's place of residence and other service sites or
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places in the community is provided as a component of residential habilitation services
and the cost of this transportation is included in the rate paid to providers of residential
habilitation services, include a statement to that effect in the service definition.
• Respite care may be made available to persons who receive residential habilitation or
other types of residential services under the waiver (e.g., adult foster care) for the relief of
a primary caregiver, provided that there is no duplication of payment. When respite is
furnished for the relief of a foster care provider, foster care services may not be billed
during the period that respite is furnished. Respite care may not be furnished for the
purpose of compensating relief or substitute staff for a waiver residential service. The
costs of such staff are met from payments for the waiver residential service.
• Retainer payments may be made to providers of residential habilitation while the waiver
participant is hospitalized or absent from his/her home for a period of no more than 30days. See State Medicaid Director letter Olmstead Update #3 (July 25, 2000) in
Attachment C for additional information. If the state elects to make such payments,
describe the circumstances under which such payments are authorized and applicable
limits on their duration.
8. Day Habilitation
Background
There is no specific regulatory definition of day habilitation but generally the service involves
the provision of regularly scheduled activities in a non-residential setting, separate from the
participant’s private residence or other residential living arrangement, such as assistance with
acquisition, retention, or improvement in self-help, socialization and adaptive skills that enhance
social development and develop skills in performing activities of daily living and community
living. As noted previously, coverage of room and board is not permitted under 1915(c) of the
Act.
Core Service Definition
Provision of regularly scheduled activities in a non-residential setting, separate from the
participant’s private residence or other residential living arrangement, such as assistance
with acquisition, retention, or improvement in self-help, socialization and adaptive skills
that enhance social development and develop skills in performing activities of daily living
and community living.
Activities and environments are designed to foster the acquisition of skills, building positive
social behavior and interpersonal competence, greater independence and personal choice.
Services are furnished consistent with the participant’s person-centered service plan. Meals
provided as part of these services shall not constitute a "full nutritional regimen" (i.e., up to
2 meals per day and which do not constitute a full nutritional regimen is permitted).).
Day habilitation services focus on enabling the participant to attain or maintain his or her
maximum potential and are coordinated with any needed therapies in the individual’s
person-centered service plan, such as physical, occupational, or speech therapy.
Instructions
• Supplement or modify the core definition as appropriate to specify service
elements/activities furnished as day habilitation under the waiver.
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• Day habilitation may be furnished in any of a variety of settings in the community other
than the person’s private residence. Day habilitation services are not limited to fixed-site
facilities. Supplement the core definition by specifying where day habilitation is
furnished.
• If transportation between the participant’s place of residence and the day habilitation site,
or other community settings in which the service is delivered, is provided as a component
part of day habilitation services and the cost of this transportation is included in the rate
paid to providers of day habilitation services, the service definition needs to include a
statement to that effect in the definition.
Guidance
• Day habilitation may not provide for the payment of services that are vocational in nature
(i.e., for the primary purpose of produces goods or performing services) per 42 CFR §
440.180(c)(3)(ii).
• Personal care/assistance may be a component part of day habilitation services as
necessary to meet the needs of a participant but may not comprise the entirety of the
service.
• Participants who receive day habilitation services may also receive educational,
supported employment and prevocational services. A participant’s person-centered
service plan may include two or more types of non-residential habilitation services.
However, different types of non-residential habilitation services should not be billed
during the same period of the day.
• Day habilitation services may be furnished to any individual who requires them and
chooses them through a person-centered planning process. Such services are not limited
to persons with intellectual or. developmental disabilities.
• For individuals with degenerative conditions, day habilitation may include training and
supports designed to maintain skills and functioning and to prevent or slow regression
rather than acquiring new skills or improving existing skills.
• Day habilitation services may also be used to provide supported retirement activities. As
some people get older, they may no longer desire to work and may need supports to assist
them in meaningful retirement activities in their communities. This might involve altering
schedules to allow for more rest time throughout the day, support to participate in
hobbies, clubs and/ or other senior related activities in their communities.
• If states wish to cover “career planning” activities, they may choose to include it as a
component part of day habilitation services, or it may be broken out as a separate
standalone service definition.
9. Education
Core Service Definition
Educational services consist of special education and related services as defined in the
Individuals with Disabilities Education Improvement Act (IDEA) of 2004, 34 CFR §
300.5 (20 U.S.C. 1401 et seq.), to the extent to which they are not available under a
program funded by IDEA. Documentation is maintained in the file of each individual
receiving this service that the service is not otherwise available under section 110 of the
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Rehabilitation Act of 1973 or the IDEA.
Instructions
• If transportation between the participant's place of residence and the educational services
site is provided as a component of education services and the cost of this transportation is
included in the rate paid to providers of education services, include a statement to that
effect in the service definition.
• Supplement or modify the core definition as appropriate to specify the service
elements/activities that are furnished under the waiver and where education services are
furnished.
• Supplement the core definition to specify the process by which it will be determined that
education services do not fall within the requirements of the IDEA.
Guidance
• The IDEA requires the provision of comprehensive education and related services to
children and youth with disabilities who are enrolled in special education programs. As a
consequence, when a state proposes to include education services in its waiver, CMS will
review the proposed waiver coverage to ensure that it does not provide for the payment of
services that are mandated under IDEA.
10. Prevocational Services
Background
Prevocational services are described in 42 CFR § 440.180(c)(2)(i). To ensure compliance with
42 CFR § 440.180(c)(3), documentation is expected to be maintained in the file of each
individual receiving this service that the service is not available under a program funded under
section 110 of the Rehabilitation Act of 1973 or the IDEA (20 U.S.C. 1401 et seq.).
Core Service Definition
Services that provide learning and work experiences, including volunteer work, where the
individual can develop general, non-job-task-specific strengths and skills that contribute to
employability in paid employment in integrated community settings. Services are expected to
occur over a defined period of time and with specific outcomes to be achieved, as determined by
the individual and his/her service and supports planning team through an ongoing personcentered planning process, to be reviewed not less than annually or more frequently as requested
by the individual. Individuals receiving prevocational services are expected to have
employment-related goals in their person-centered service plan; the general habilitation
activities may be designed to support such employment goals. Competitive, integrated
employment in the community for which an individual is compensated at or above the minimum
wage, but not less than the customary wage and level of benefits paid by the employer for the
same or similar work performed by individuals without disabilities is considered to be the
successful outcome of prevocational services.
Prevocational services should enable each individual to attain the highest level of work in the
most integrated setting and with the job matched to the individual’s interests, strengths,
priorities, abilities, and capabilities, while following applicable federal wage guidelines.
Services are intended to develop and teach general skills that lead to competitive and integrated
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workers and customers; generally accepted community workplace conduct and dress; ability to
follow directions; ability to attend to tasks; workplace problem solving skills and strategies;
general workplace safety and mobility training.
Participation in prevocational services is not a required pre-requisite for individual or small
group supported employment services provided under the waiver. Many individuals,
particularly those transitioning from school to adult activities, are likely to choose to go directly
into supported employment. Similarly, the evidence-based Individual Placement and Support
(IPS) model of supported employment for individuals with behavioral health conditions
emphasizes rapid job placement in lieu of prevocational services.
Documentation is maintained in the file of each individual receiving this service that the service
is not available under a program funded under section 110 of the Rehabilitation Act of 1973 or
the IDEA (20 U.S.C. 1401 et seq.).
Instructions
•
•

•

Supplement or modify the core definition as appropriate to incorporate the specific
service elements furnished under the waiver.
Prevocational services may be furnished in a variety of locations in the community and
are not limited to fixed-site facilities. Specify in the service definition where these
services are furnished.
If transportation between the participant's place of residence and the prevocational
services site/s is provided as a component part of prevocational services and the cost of
this transportation is included in the rate paid to providers of prevocational services, the
service definition includes a statement to that effect.
Specify in the definition how the determination is made that the services furnished to the
participant are prevocational rather than vocational in nature in accordance with 42 CFR
§ 440.180(c)(2)(i).

Guidance
•

Per 42 CFR §440.180(c)(2)(i), pre-vocational services include activities that are not
primarily directed at teaching skills to perform a particular job, but at underlying
habilitative goals (e.g., attention span, motor skills, interpersonal relations with coworkers and supervisors) that are associated with building skills necessary to perform
compensated work in community integrated employment. Vocational services, which are
not covered through waivers, are services that teach job task specific skills required by a
participant for the primary purpose of completing those tasks for a specific facility-based
job and are not delivered in an integrated work setting through supported employment.
The distinction between vocational and pre-vocational services is that pre-vocational
services, regardless of setting, are delivered for the purpose of furthering habilitation
goals that will lead to greater opportunities for competitive and integrated employment
and career advancement at or above minimum wage. These goals are described in the
individual’s person-centered services and supports plan and are designed to teach skills
that will lead to integrated competitive employment.

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A person receiving pre-vocational services may pursue employment opportunities at any
time to enter the general work force. Pre-vocational services are intended to assist
individuals to enter the general workforce.
Individuals participating in prevocational services may be compensated in accordance
with applicable federal laws and regulations and the provision of prevocational services is
always delivered with the intention of leading to permanent integrated employment at or
above the minimum wage in the community.
All prevocational and supported employment service options should be reviewed and
considered as a component of an individual’s person-centered services and supports plan
no less than annually, more frequently as necessary or as requested by the individual.
These services and supports should be designed to support successful employment
outcomes consistent with the individual’s goals.
Personal care/assistance may be a component of prevocational services but may not
comprise the entirety of the service.
Individuals who receive prevocational services may also receive educational, supported
employment and/or day habilitation services. A participant’s person-centered service plan
may include two or more types of non-residential habilitation services. However,
different types of non-residential habilitation services may not be billed during the same
period of the day.
If states wish to cover “career planning” activities, they may choose to include it as a
component part of pre-vocational services, or it may be broken out as a separate standalone service definition.
Prevocational services may include volunteer work, such as volunteer learning and
training activities that prepare a person for entry into the paid workforce.
Prevocational services are not limited to persons with intellectual or developmental
disabilities.

11-a Supported Employment - Individual Supported Employment
Background
Supported employment services are described at 42 CFR § 440.180(c)(2)(iii) and defined in the
CMCS Informational Bulletin dated September 16, 2011 (available in Attachment D). To ensure
compliance with 42 CFR § 440.180(c)(3), documentation should be maintained in the file of
each individual receiving this service that the service is not available under a program funded
under section 110 of the Rehabilitation Act of 1973 or the IDEA (20 U.S.C. 1401 et seq.).
Federal financial participation may not be claimed for incentive payments, subsidies, or
unrelated vocational training expenses such as the following:
1. Incentive payments made to an employer to encourage or subsidize the employer's
participation in supported employment; or
2. Payments that are passed through to users of supported employment services.

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Core Service Definition
Ongoing supports to participants who, because of their disabilities, need intensive on-going
support to obtain and maintain an individual job in competitive or customized employment, or
self-employment, in an integrated work setting in the general workforce at or above the state’s
minimum wage, at or above the customary wage and level of benefits paid by the employer for
the same or similar work performed by individuals without disabilities. The outcome of this
service is sustained paid employment at or above the minimum wage in an integrated setting in
the general workforce, in a job that meets personal and career goals.
Supported employment services can be provided through many different service models. Some of
these models can include evidence-based supported employment for individuals with mental
illness, or customized employment for individuals with significant disabilities. States may define
other models of individualized supported employment that promote community inclusion and
integrated employment.
Supported employment individual employment supports may also include support to establish or
maintain self-employment, including home-based self-employment. Supported employment
services are individualized and may include any combination of the following services:
vocational/job-related discovery or assessment, person-centered employment planning, job
placement, job development, negotiation with prospective employers, job analysis, job carving,
training and systematic instruction, job coaching, benefits and work-incentives planning and
management, transportation, asset development and career advancement services. Other
workplace support services including services not specifically related to job skill training that
enable the waiver participant to be successful in integrating into the job setting.
Services do not include incentive payments made to an employer to encourage or subsidize the
employer's participation in supported employment; or payments that are passed through to users
of supported employment services.
Documentation is maintained in the file of each individual receiving this service that the service
is not available under a program funded under section 110 of the Rehabilitation Act of 1973 or
the IDEA (20 U.S.C. 1401 et seq.).
Instructions
• Supplement or modify the core definition as appropriate to incorporate the specific
service elements furnished in the waiver.
• Supported employment individual employment supports is not intended for people
working in mobile work crews of small groups of people with disabilities in the
community. That type of work support is addressed in the core service definition for
Supported Employment Small Group employment support.
• If transportation between the participant's place of residence and the employment site is a
component part of supported employment individual employment services and the cost of
this transportation is included in the rate paid to providers of supported employment
individual employment supports services, as permitted under 42 CFR §
440.180(c)(2)(iii)(C), the service definition must include a statement to that effect.
Guidance
•

Statewide rate setting methodologies, which are further described in I-2-a of the waiver
application may be used to embrace new models of support that help a person obtain and
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maintain integrated employment in the community. These may include co-worker support
models, payments for work milestones, such as length of time on the job, number of
hours the participant works, etc. Payments for work milestones are not incentive
payments that are made to an employer to encourage or subsidize the employer’s hiring
an individual with disabilities, which is not permissible.
Supported employment individual employment supports does not include facility based,
or other similar types of vocational services furnished in specialized facilities that are not
a part of the general workplace.
In addition to the need for an appropriate job match that meets the individual’s skills and
interests, individuals with the most significant disabilities may also need long term
employment support to successfully maintain a job due to the ongoing nature of the
waiver participant’s support needs, changes in life situations, or evolving and changing
job responsibilities.
All prevocational and supported employment service options should be reviewed and
considered as a component of an individual’s person-centered services and supports plan
no less than annually, more frequently as necessary or as requested by the individual.
These services and supports should be designed to support successful employment
outcomes consistent with the individual’s goals.
Supported employment individual employment supports do not include volunteer work.
Such volunteer learning and training activities that prepare a person for entry into the
paid workforce are addressed through pre-vocational services.
Supported employment individual employment supports do not include payment for
supervision, training, support and adaptations typically available to other workers without
disabilities filling similar positions in the business.
Supported employment individual employment supports may be provided by a coworker or other job site personnel provided that the services that are furnished are not
part of the normal duties of the co-worker, supervisor or other personnel and these
individuals meet the pertinent qualifications for the providers of service.
Personal care/assistance may be a component part of supported employment individual
employment supports but may not comprise the entirety of the service.
Supported employment individual employment supports may include services and
supports that assist the participant in achieving self-employment through the operation of
a business; however, Medicaid funds may not be used to defray the expenses associated
with starting up or operating a business. Assistance for self-employment may include: (a)
aid to the participant in identifying potential business opportunities; (b) assistance in the
development of a business plan, including potential sources of business financing and
other assistance in including potential sources of business financing and other assistance
in developing and launching a business; (c) identification of the supports that are
necessary in order for the participant to operate the business; and (d) ongoing assistance,
counseling and guidance once the business has been launched.
Individuals receiving supported employment individual employment supports services
may also receive educational, pre-vocational and/or day habilitation services and career
planning services. A participant’s person-centered services and supports plan may
include two or more types of non-residential habilitation services. However, different
types of non-residential habilitation services may not be billed during the same period of
time.
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If states wish to cover “career planning” they may choose to include it as a component
part of supported employment individualized employment support services, or it may be
broken out as a separate standalone service definition.
Supported employment individual employment supports may be furnished to any
individual who requires and chooses them through a person-centered planning process.
They are not limited to persons with intellectual or developmental disabilities.

11-b Supported Employment – Small Group Employment Support
Background
Supported Employment – Small Group Employment Support are services defined in the CMCS
Informational Bulletin dated September 16, 2011 (available in Attachment D). To ensure
compliance with 42 CFR § 440.180(c)(3), documentation should be maintained in the file of
each individual receiving this service that the service is not available under a program funded
under section 110 of the Rehabilitation Act of 1973 or the IDEA (20 U.S.C. 1401 et seq.).
Federal financial participation may not be claimed for incentive payments, subsidies, or
unrelated vocational training expenses such as the following:
1. Incentive payments made to an employer to encourage or subsidize the employer's
participation in supported employment services; or
2. Payments that are passed through to users of supported employment services.
Core Service Definition
Services and training activities provided in regular business and industry settings for groups of
two (2) to eight (8) workers with disabilities. Small group employment support does not include
services provided in facility-based work settings. Examples include mobile crews and other
business-based workgroups employing small groups of workers with disabilities in integrated
employment in the community. The outcome of this service should lead to sustained paid
employment and work experience leading to further career development and individual
integrated community-based employment for which an individual is compensated at or above the
minimum wage, but not less than the customary wage and level of benefits paid by the employer
for the same or similar work performed by individuals without disabilities.
Supports may include any combination of the following services: vocational/job-related
discovery or assessment, person-centered employment planning, job placement, job
development, negotiation with prospective employers, job analysis, training and systematic
instruction, job coaching, benefits management, transportation and career advancement
services. Other workplace support services may include services not specifically related to job
skill training that enable the waiver participant to be successful in integrating into the job
setting. Supported employment small group employment support should be provided in a
manner that promotes integration into the workplace and interaction between participants and
people without disabilities in those workplaces.
Services do not include incentive payments made to an employer to encourage or subsidize the
employer's participation in supported employment services; or payments that are passed through
to users of supported employment services.

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Documentation is maintained in the file of each individual receiving this service that the service
is not available under a program funded under section 110 of the Rehabilitation Act of 1973 or
the IDEA (20 U.S.C. 1401 et seq.).
Instructions
•
•

Supplement or modify the core definition as appropriate to incorporate the specific
service elements furnished in the waiver.
If transportation between the participant's place of residence and the employment site is a
component part of supported employment services small group employment support and
the cost of this transportation is included in the rate paid to providers of supported
employment small group employment supports services as permitted under 42 CFR §
440.180(c)(2)(iii)(C), the service definition must include a statement to that effect.

Technical Guidance
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Supported employment small group employment support does not include facility-based
work settings or other similar types of vocational services furnished in specialized
facilities that are not a part of general community workplaces.
Supported employment small group employment supports do not include volunteer work.
Such volunteer learning and training activities that prepare a person for entry into the
paid workforce are addressed through pre-vocational services.
Supported employment small group employment support does not include payment for
supervision, training, support and adaptations typically available to other workers without
disabilities filling similar positions in the business.
Supported employment small group employment support services may be provided by a
co-worker or other job site personnel provided that the services that are furnished are not
part of the normal duties of the co-worker, supervisor or other personnel and these
individuals meet the pertinent qualifications for the providers of service.
Personal care/assistance may be a component part of supported employment small group
employment support services but may not comprise the entirety of the service.
All prevocational and supported employment service options should be reviewed and
considered as a component of an individual’s person-centered services and supports plan
no less than annually, more frequently as necessary or as requested by the individual.
These services and supports should be designed to support successful employment
outcomes consistent with the individual’s goals.
Individuals receiving supported employment small group employment support services
may also receive educational, prevocational and/or day habilitation services and career
planning services. A participant’s person-centered services and supports plan may
include two or more types of non-residential habilitation services. However, different
types of non-residential habilitation services may not be billed during the same period of
time.
If states wish to cover “career planning” they may choose to include it as a component
part of supported employment small group employment support services, or it may be
broken out as a separate standalone service definition.
Supported employment small group employment support services may be furnished to
any individual who requires and chooses them. They are not limited to persons with
intellectual or developmental disabilities.
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12. Respite Care
Background
Respite services are identified as home and community-based services at 42 CFR §
440.180(b)(7). There is no specific regulatory definition of respite. Federal financial participation
may not be claimed for the cost of room and board except when provided as part of respite care
furnished in a facility approved by the state that is not a private residence per 42 CFR §
441.360(b).
Core Service Definition
Services provided to participants unable to care for themselves that are furnished on a
short-term basis because of the absence or need for relief of those persons who normally
provide care for the participant. Services do not include room and board except when
provided as part of respite care furnished in a facility approved by the state that is not a
private residence.
Instructions
• Supplement or modify the core definition as appropriate to incorporate specific service
elements under the waiver.
• The service definition specifies the location(s) where respite care is provided. These
locations may include (but are not limited to):
o Participant’s home or private place of residence
o The private residence of a respite care provider
o Foster home
o Medicaid certified Hospital
o Medicaid certified Nursing Facility
o Medicaid certified ICF/IID
o Group home
o Licensed respite care facility
o Other community care residential facility approved by the state that is not a
private residence. Specify the types of these facilities where respite is provided.
• The service definition specifies the location(s) (if any) where FFP is claimed for the cost
of room and board. FFP may not be claimed for room and board when respite is provided
in the participant’s home or place of residence pursuant to 42 CFR § 441.360(b).
Guidance
• Receipt of respite care does not necessarily preclude a participant from receiving other
services on the same day. For example, a participant may receive day services (such as
supported employment, adult day care, personal care, nursing care, etc.) on the same day
as they receive respite care. Payment may not be made for respite furnished at the same
time when other services that include care and supervision are provided per the Improper
Payments Elimination and Recovery Act of 2010.
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• Respite care may be made available to persons who receive residential habilitation or
other types of residential services under the waiver (e.g., adult foster care) for the relief of
a primary caregiver, provided that there is no duplication of payment. When respite is
furnished for the relief of a foster care provider, foster care services may not be billed
during the period that respite is furnished. Respite care may not be furnished for the
purpose of compensating relief or substitute staff for a waiver residential service. The
costs of such staff are met from payments for the waiver residential service.
Mental Health Services
Day treatment or partial hospitalization, psychosocial rehabilitation, and clinic services may be
covered under the state plan. Under 42 CFR § 440.180(b)(8), a state may also furnish these
services under a 1915(c) home and community-based services waiver to individuals with chronic
mental illness. A state may also offer other types of mental health services in addition to these as
“other” waiver services.
The provision of mental health services under a waiver is not limited to persons who have a
primary diagnosis of chronic mental illness. They may be furnished to any participant who
requires them regardless of waiver target group. As is the case with other services, mental health
services under a waiver may be furnished on an “extended state plan services” coverage basis or
may provide for the coverage of services furnished that differ from state plan services.
Mental health services offered under the state plan sometimes are limited to Medicaid
beneficiaries who have been diagnosed as having serious (severe or persistent) mental illnesses.
Under a waiver, a state may offer mental health services to persons who would benefit from
them but who do not meet state plan criteria.
When a state proposes to cover mental health services under a waiver, CMS will review the state
plan to ensure that the proposed coverage does not duplicate the coverage under the state plan.
In the case of waivers that serve individuals under age 21, this review also will encompass the
extent to which the proposed mental health services can be provided under the state plan and,
therefore, should be furnished as services required under EPSDT.
13. Day Treatment
Background
Day treatment for persons with chronic mental illness can be included under a 1915(c) waiver in
accordance with 42 CFR § 440.180(b)(8). There is no specific regulatory definition of day
treatment. There are two core service definitions provided.
When day treatment or partial hospitalization services are covered under the waiver on an
“extended state plan service” basis (e.g., the services furnished differ from the state plan
coverage only in amount, duration and frequency but not scope or type of provider), employ the
alternate service core service definition provided below.
Core Service Definition
Services that are necessary for the diagnosis or treatment of the individual's mental illness.
The purpose of this service is to maintain the individual's condition and functional level and
to prevent relapse or hospitalization. These services often consist of the following elements:
•

individual and group therapy with physicians or psychologists (or other mental health
professionals to the extent authorized under state law);
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•

occupational therapy, requiring the skills of a qualified occupational therapist;

•

services of social workers, trained psychiatric nurses, and other staff trained to work
with individuals with psychiatric illness;

•

drugs and biologicals furnished for therapeutic purposes, provided that the
medication is not otherwise available under the state plan or as a Medicare benefit to
a participant;

•

individual activity therapies that are not primarily recreational or diversionary,

•

family counseling (the primary purpose of which is treatment of the individual's
condition);

•

training and education of the individual (to the extent that training and educational
activities are closely and clearly related to the individual's care and treatment); and,

•

diagnostic services.

Meals provided as part of these services may not constitute a "full nutritional regimen" i.e., up to
2 meals per day and which do not constitute a full nutritional regimen per day is permitted).
Core Service Definition (Extended State Plan Service):
Services that are provided when day treatment services furnished under the approved state plan
limits are exhausted. The scope and nature of these services do not differ from day treatment
services furnished under the state plan. The provider qualifications specified in the state plan
apply. The additional amount of services that may be provided through the waiver is as follows:
(specify)
Instructions
• Supplement or modify the core definition’s list of service elements as appropriate to
reflect the specific service elements covered under the waiver.
• If transportation between the participant's place of residence and the day treatment is
provided as a component part of day treatment/partial hospitalization services and the
cost of this transportation is included in the rate paid to providers of these services,
include a statement to that effect in the service definition.
• In the definition, specify whether these services are only furnished to individuals with
chronic mental illness or whether they are available to all individuals served on this
waiver who may require them, whether or not they have a formal diagnosis of chronic
(serious) mental illness.
If day treatment services are covered under the state plan but the waiver coverage is different,
include the following statement in the service definition: “Day treatment (partial
hospitalization) services under the waiver differ in nature, scope, supervision arrangements, or
provider type (including provider training and qualifications) from day treatment (partial
hospitalization) services in the state plan.” Also, specify the differences between the waiver and
the state plan coverage. If day treatment or partial hospitalization is not covered under the state
plan, do not include this statement.

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14. Psychosocial Rehabilitation Services
Background
Psychosocial rehabilitation services generally encompass various types of mental health services
that may be covered as rehabilitative services in the state plan under 42 CFR § 440.130.
Psychosocial rehabilitation services for persons with chronic mental illness can also be included
under a 1915(c) waiver in accordance with 42 CFR § 440.180(b)(8). There are two core service
definitions provided.
When psychosocial rehabilitation services are covered under the waiver solely on an “extended
state plan service” basis (e.g., the services furnished differ from the state plan coverage only in
amount, duration and frequency but not scope or type of provider), use the alternate service core
service definition provided below.
Core Service Definition
Services may include the following:
•

restoration and maintenance of daily living skills (grooming, personal hygiene,
cooking, nutrition, health and mental health education, medication management,
money management and maintenance of the living environment);

•

social skills training in appropriate use of community services;

•

development of appropriate personal support networks, therapeutic recreational
services (which are focused on therapeutic intervention rather than diversion); and,

•

telephone monitoring and counseling services.

The following are specifically excluded from payment for psychosocial rehabilitation
services:
•

vocational services,

•

prevocational services,

•

supported employment services, and

•

room and board.

Core Service Definition (Extended State Plan Service):
Services that are provided when psychosocial rehabilitation services furnished under the
approved state plan limits are exhausted. The scope and nature of these services do not
differ from psychosocial services furnished under the state plan. The provider qualifications
specified in the state plan apply. The additional amount of services that may be provided
through the waiver is as follows: (specify)
Instructions
• Supplement or modify the core definition list of service elements as appropriate to reflect
the specific service elements covered under the waiver.
• In the definition, specify whether these services are only furnished to individuals with
chronic mental illness or whether they are made available to all waiver participants who
need the service, whether or not they have a formal diagnosis of chronic (serious) mental
illness.
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• Psychosocial rehabilitation services may be furnished in any of a variety of locations in
the community, including the participant’s own home, provider-operated living
arrangements and other community settings. In the service definition, specify where
these services will be furnished. When services are furnished in a residence, federal
financial participation may not be claimed for the cost of room and board.
• If psychosocial rehabilitation services (mental health rehabilitation services) are covered
under the state plan but the waiver coverage is different, include the following in the
service definition: “Psychosocial rehabilitation services under the waiver differ in
nature, scope, supervision arrangements, or provider type (including provider training
and qualifications) from psychosocial rehabilitation services in the state plan.” Also,
specify the differences between the waiver coverage and the state plan coverage. If
psychosocial rehabilitation services are not covered under the state plan, do not include
this statement.
Guidance
• The term “psychosocial rehabilitation services” subsumes the various types of mental
health services that may be covered as rehabilitative services in the state plan under 42
CFR § 440.130.
• Participants who are furnished psychosocial rehabilitation services may be provided
prevocational and/or supported employment services when such services are included in
the waiver as enhanced habilitation services. However, these services may not be
combined with psychosocial rehabilitation services.
15. Clinic Services
Background
Clinic services under the state plan are defined in 42 CFR §440.90 as preventive, diagnostic,
therapeutic, rehabilitative, or palliative services that are furnished by a facility that is not part of
a hospital but is organized and operated to provide medical care to outpatients. Clinic services
(whether or not furnished in a facility) for individuals with chronic mental illness are also
permitted under 1915(c) waivers in accordance with 42 CFR § 440.180. There are two core
service definitions provided below.
Core Service Definition
Services (whether or not furnished in a facility, that include preventive, diagnostic,
therapeutic, rehabilitative, or palliative services provided to individuals with chronic mental
illness.
Core Service Definition (Extended State Plan Service):
Services that are provided when clinic services (as defined in 42 CFR § 440.90) furnished under
the approved state plan limits are exhausted. The scope and nature of these services do not
otherwise differ from clinic services furnished under the state plan. The provider qualifications
specified in the state plan apply. The additional amount of services that may be provided
through the waiver is as follows: (specify)
Instructions
• In the definition, specify whether these services are only furnished to individuals with
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chronic mental illness or whether they are made available to all individuals served on this
waiver, whether or not they have a formal diagnosis of chronic (serious) mental illness.
• Supplement or modify the core definition list of service elements as appropriate to reflect
the specific service elements covered under the waiver.
• In the definition, specify whether clinic services may only be furnished on the premises
of a clinic or may be furnished outside the clinic facility. If services may be furnished
offsite, specify the locations where they may be furnished.
• If clinic services are covered under the state plan for individuals with a chronic mental
illness but the waiver coverage is different, include the following statement in the service
definition: “Clinic services under the waiver differ in nature, scope, supervision
arrangements, or provider type (including provider training and qualifications) from
clinic services in the state plan.” Also, specify the differences between the waiver
coverage and the state plan coverage. One way that the coverage of clinic services under
the waiver may differ from coverage under the state plan is when services are furnished
off-site from the clinic. Describe the difference between the waiver and the state plan
coverage.
• When mental health clinic services are covered under the waiver only on an “extended
state plan service” basis (e.g., the services furnished differ from the state plan coverage
only in amount, duration and frequency but not scope), employ the following alternate
service core service definition:
16. Live-in Caregiver
Background
There is no regulatory definition of this service; however, section 1915(c)(1) limits payment for
the service to the additional costs of rent and food that can be reasonably attributed to an
unrelated live-in personal caregiver who resides in the same household as the waiver participant.
Core Service Definition
Services include the payment for the additional costs of rent and food that can be reasonably
attributed to an unrelated live-in personal caregiver who resides in the same household as
the waiver participant. Payment will not be made when the participant lives in the
caregiver’s home or in a residence that is owned or leased by the provider of Medicaid
services.
Instructions
• Live-in caregiver is treated as a service that needs to be included in the listing of services
in Appendix C-1.
• Method of determining the amount paid is specified in Appendix I-6.
• The expected costs and utilization of live-in care giver payments must be accounted for
as a distinct item in the computation of Factor D in Appendix J-2.

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B. Other Services
Other services are services that are not: (a) statutory services; (b) extended state plan services; or
(c) services in support of participant direction. Provided below are services that may be covered
under a waiver as home and community-based services consistent with 42 CFR § 440.180(b)(9).
1. Home Accessibility Adaptations (a.k.a., environmental accessibility adaptations)
Background
There is no regulatory definition for home accessibility adaptations; however, they generally
entail physical modifications to a private residence to enable the participant to function
independently in their own home.
Core Service Definition
Those physical adaptations to the private residence of the participant or the participant’s
family, required by the participant's service plan, that are necessary to ensure the health,
welfare and safety of the participant or that enable the participant to function with greater
independence in the home. Such adaptations include the installation of ramps and grab-bars,
widening of doorways, modification of bathroom facilities, or the installation of specialized
electric and plumbing systems that are necessary to accommodate the medical equipment and
supplies that are necessary for the welfare of the participant.
Excluded are those adaptations or improvements to the home that are of general utility and are
not of direct medical or remedial benefit to the participant. Adaptations that add to the total
square footage of the home are excluded from this benefit except when necessary to complete an
adaptation (e.g., in order to improve entrance/egress to a residence or to configure a bathroom
to accommodate a wheelchair).
Instructions
• Supplement or modify the core definition list of service elements as appropriate to reflect
the specific service elements covered under the waiver.
• An exhaustive listing of the specific adaptations may be included in the definition rather
than the more general types of adaptations contained in the definition. In the core
definition, the sentence beginning “Such adaptations …” may be deleted and the sentence
“Adaptations include:” substituted, followed by the exhaustive listing of the specific
home adaptations included in the coverage.
• The scope of home accessibility modifications may include the performance of necessary
assessments to determine the types of modifications that are necessary. The cost
estimates and claiming for this activity would need to be itemized separately in Appendix
J as a cost component of the service.
Guidance
• Home accessibility adaptations may not be furnished to adapt living arrangements that
are owned or leased by providers of waiver services.
• When, as provided in CMS State Medicaid Director letter Olmstead Update No. #3 (see
Attachment C), the state authorizes home accessibility modifications up to 180
consecutive days of admission in advance of the community transition of an
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institutionalized person, the definition should reflect that provision has been made for
such modifications. In such cases, the home modification begun while the person was
institutionalized is not considered complete, and may not be billed until, the date the
individual leaves the institution and enters the waiver.
2. Vehicle Modifications
Background
There is no regulatory definition for vehicle modifications; however, they generally entail
adaptations or alterations to an automobile or van that is the waiver participant’s primary means
of transportation in order to safely facilitate the participant’s integration into the community.
Core Service Definition
Adaptations or alterations to an automobile or van that is the waiver participant’s primary
means of transportation in order to accommodate the special needs of the participant. Vehicle
adaptations are specified by the service plan as necessary to enable the participant to integrate
more fully into the community and to ensure the health, welfare and safety of the participant.
The following are specifically excluded:
1. Adaptations or improvements to the vehicle that are of general utility, and are not of
direct medical or remedial benefit to the individual;
2. Purchase or lease of a vehicle; and
3. Regularly scheduled upkeep and maintenance of a vehicle except upkeep and
maintenance of the modifications.
Instructions
• Modify or supplement the core definition to reflect the scope of vehicle modifications
furnished under the waiver. If such modifications are limited to specific modifications,
list the modifications for which payment will be made.
• The scope of vehicle modifications may include the performance of necessary
assessments to determine the types of modifications that are necessary. The cost
estimates and claiming for this activity would need to be itemized separately in Appendix
J as a cost component of the service.
Guidance
• The vehicle that is adapted may be owned by the individual, a family member with whom
the individual lives or has consistent and on-going contact, or a non-relative who
provides primary long-term support to the individual and is not a paid provider of such
services.
• Payment may not be made to adapt the vehicles that are owned or leased by paid
providers of waiver services. The costs of necessary adaptations to provider vehicles
may be compensated in the payment rate for transportation or other services (e.g., day
habilitation) that include the cost of transportation.

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3. Non-Medical Transportation
Background
Under the Medicaid program, states must assure coverage of both emergency transportation and
non-emergency medical transportation (NEMT) when necessary to enable the beneficiary to
access a covered service. Under a home and community-based waiver, states have the option to
include non-medical transportation to supplement state plan medical transportation.
Core Service Definition
Service offered in order to enable waiver participants to gain access to waiver and other
community services, activities and resources, as specified by the service plan. This service is
offered in addition to medical transportation required under 42 CFR § 431.53 and
transportation services under the state plan, defined at 42 CFR § 440.170(a) (if applicable), and
does not replace them. Transportation services under the waiver are offered in accordance with
the participant’s service plan. Whenever possible, family, neighbors, friends, or community
agencies which can provide this service without charge are utilized.
Instructions
• Modify or supplement the core definition to reflect the scope of non-medical
transportation furnished under the waiver.
• If transportation services are limited to specific situations, specify when transportation
services are furnished in the definition.
Guidance
• Waiver transportation services may not be substituted for the transportation services that
a state is obligated to furnish under the requirements of 42 CFR § 431.53. For example,
transportation of a waiver participant to receive medical care that is provided under the
state plan must be billed as a state plan transportation service or charged as an
administrative expense, not as a waiver service. Payment for transportation under the
waiver is limited to the costs of transportation needed to access a waiver service included
in the participant’s service plan or access other activities and resources identified in the
service plan.
• When the costs of transportation are included in the provider rate for another waiver
service (e.g., adult day health), there must be mechanisms to prevent the duplicative
billing of non-medical transportation services in accordance with the Improper Payments
Elimination and Recovery Act of 2010.
• Non-medical transportation services may be furnished to waiver participants under
age 21.
• If some providers have capacity to transport and it is incidental to the service the provider
is delivering, then the state would need to incorporate the cost of transportation into the
rate or add a cost component to cover it. If there are also providers that don’t have the
capacity to transport, then the state should reflect the different reimbursement
methodologies in Appendix I, and the range of cost estimates in Appendix J.

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4. Specialized Medical Equipment and Supplies
Background
Coverage of medical supplies and equipment is available under the state plan pursuant to 42
CFR § 440.70(b)(3) and may also be covered under a 1915(c) HCBS waiver to supplement
state plan coverage.
Core Service Definition
Specialized medical equipment and supplies include: (a) devices, controls, or appliances,
specified in the plan of care, that enable participants to increase their ability to perform
activities of daily living; (b) devices, controls, or appliances that enable the participant to
perceive, control, or communicate with the environment in which they live; (c) items necessary
for life support or to address physical conditions along with ancillary supplies and equipment
necessary to the proper functioning of such items; (d) such other durable and non-durable
medical equipment not available under the state plan that is necessary to address participant
functional limitations; and, (e) necessary medical supplies not available under the state plan.
Items reimbursed with waiver funds are in addition to any medical equipment and supplies
furnished under the state plan and exclude those items that are not of direct medical or remedial
benefit to the participant. All items have to meet applicable standards of manufacture, design
and installation.
Instructions
• Modify or supplement the core definition to reflect the scope of medical equipment and
supplies furnished under the waiver.
• When coverage is limited to specific supplies or equipment, include a listing in the
definition.
• If the coverage includes the costs of maintenance and upkeep of equipment, include a
statement to that effect in the definition.
• When the coverage includes training the participant or caregivers in the operation and/or
maintenance of the equipment or the use of a supply, include a statement to that effect in
the definition.
• If the coverage includes the performance of assessments to identify the type of equipment
needed by the participant, include a statement to that effect in the definition. The cost
estimates and claiming for this activity would need to be itemized separately in Appendix
J as a cost component of the service.
• When necessary equipment is purchased in advance of the community placement of an
institutionalized person and claimed as a waiver cost post-entrance of the person to the
waiver, include a statement to that effect.
Guidance
• This coverage may be used to supplement medical supplies and equipment under the state
plan, items that the state makes available, or items that Medicare covers under Durable
Medical Equipment.
• States have employed this coverage to furnish a wide variety of adaptive positioning
devices, mobility aids, and adaptive equipment.
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• The coverage also may include augmentative communication devices and services, or
such services may be covered as a distinct service.
• Medical equipment and supplies that can be covered under the state plan should be
furnished as services required under EPSDT to waiver participants under age 21.
5. Assistive Technology
Background
There is no regulatory definition for assistive technology; however, generally it includes
equipment, service animals, or product systems that address a specific need and enables the
waiver participant to function safely in their home or community.
Core Service Definition
Assistive technology means an item, piece of equipment, service animal or product system,
whether acquired commercially, modified, or customized, that is used to increase, maintain,
or improve functional capabilities of participants. Assistive technology service means a
service that directly assists a participant in the selection, acquisition, or use of an assistive
technology device. Assistive technology includes-•

the evaluation of the assistive technology needs of a participant, including a
functional evaluation of the impact of the provision of appropriate assistive
technology and appropriate services to the participant in the customary
environment of the participant;

•

services consisting of purchasing, leasing, or otherwise providing for the acquisition
of assistive technology devices for participants;

•

services consisting of selecting, designing, fitting, customizing, adapting, applying,
maintaining, repairing, or replacing assistive technology devices;

•

coordination and use of necessary therapies, interventions, or services with assistive
technology devices, such as therapies, interventions, or services associated with
other services in the service plan;

•

training or technical assistance for the participant, or, where appropriate, the
family members, guardians, advocates, or authorized representatives of the
participant; and

•

training or technical assistance for professionals or other individuals who provide
services to, employ, or are otherwise substantially involved in the major life
functions of participants.

Instructions
•

Modify or supplement the core definition to reflect the scope of assistive technology
services and devices furnished under the waiver. If such devices, items and/or services
are limited to specific types, list the types for which payment will be made.

•

If the coverage includes the performance of assessments to identify the type of equipment
needed by the participant, include a statement to that effect in the definition. The cost
estimates and claiming for this activity would need to be itemized separately in Appendix
J as a cost component of the service.
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6. Personal Emergency Response System (PERS)
Background
There is no regulatory citation for PERS; however, it is a common service that enables waiver
participants to request help in an emergency.
Core Service Definition
Coverage of PERS under a waiver refers to an electronic device that enables waiver
participants to secure help in an emergency. The participant may also wear a portable
"help" button to allow for mobility. The system is connected to the participant’s phone and
programmed to signal a response center once a "help" button is activated. The response
center is staffed by trained professionals, as specified herein.
Instructions
• Supplement or modify the core definition as appropriate to reflect the specific covered
devices and services under the waiver.
• If installation, upkeep and maintenance of devices/systems are provided, include a
statement to that effect in the definition. The cost estimates and claiming for this activity
would need to be itemized separately in Appendix J as a cost component of the service.
7. Community Transition Services
Background
There is no regulatory citation for community transition services. The core service definition
below is instead derived from guidance included in State Medicaid Director letter #02-008
(available in Attachment C), which stipulates that states may secure federal matching funds
under HCBS waivers on behalf of waiver participants who make the transition from an
institution to their own home or apartment in the community, such as security deposits, that do
not constitute payment for housing rent. The service is also available for participants
transitioning from a provider-operated/controlled living arrangement to a living arrangement in a
private residence where the person is directly responsible for his or her own living expenses.
Core Service Definition
Non-recurring set-up expenses for individuals who are transitioning from a Medicaid-funded
institution or another provider-operated/controlled living arrangement to a living arrangement
in a private residence where the person is directly responsible for his or her own living expenses.
Allowable expenses are those necessary to enable a person to establish a basic household that
do not constitute room and board and may include: (a) security deposits that are required to
obtain a lease on an apartment or home; (b) essential household furnishings and moving expense
required to occupy and use a community domicile, including furniture, window coverings, food
preparation items, and bed/bath linens; (c) set-up fees or deposits for utility or service access,
including telephone, electricity, heating and water; (d) services necessary for the individual’s
health and safety such as pest eradication and one-time cleaning prior to occupancy; (e) moving
expenses; (f) necessary home accessibility adaptations; and, (g) activities to assess need,
arrange for and procure need resources.

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Community Transition Services are furnished only to the extent that they are reasonable and
necessary as determining through the service plan development process, clearly identified in the
service plan and the person is unable to meet such expense or when the services cannot be
obtained from other sources. Community Transition Services do not include monthly rental or
mortgage expense; food, regular utility charges; and/or household appliances or items that are
intended for purely diversional/recreational purposes.
Instructions
• Supplement or modify the core definition as appropriate to reflect the specific community
transition services that are included under the waiver.
• The service definition may be modified as necessary to reflect specific items and services
that are included or excluded.
• Community Transition Services may not include payment for room and board. The
payment of a security deposit is not considered rent.
Guidance
• See State Medicaid Director letter #02-008 (Attachment C) for further information. Also,
see State Health Official letter # 21-001 (in Appendix C).
• When Community Transition Services are furnished to individuals returning to the
community from a Medicaid-funded institutional setting or a provideroperated/controlled living arrangement before entrance to the waiver, the costs of such
services are considered to be incurred and billable when the person leaves the
institutional setting and enters the waiver. The individual must be reasonably expected to
be eligible for and to enroll in the waiver. If for any unseen reason, the individual does
not enroll in the waiver (e.g., due to death or a significant change in condition),
transitional services may be billed to Medicaid as an administrative cost in accordance
with a CMS-approved cost allocation plan.
• At the state’s option, Community Transition Services may be furnished as a waiver
service to individuals who transition from provider-operated settings other than Medicaid
reimbursable institutions to their own private residence in the community.
• Community Transition Services may not be used to pay for furnishing living
arrangements that are owned or leased by a waiver provider where the provision of these
items and services are inherent to the service they are already providing.
8. Skilled Nursing
Background
As defined in 42 CFR §440.70, “skilled nursing” is a component of the Medicaid state plan
home health benefit and refers to the provision of nursing services on a periodic or intermittent
basis. Coverage of skilled nursing services under a 1915(c) waiver may supplement state plan
coverage. There are two core service definitions provided.
Core Service Definition
Services listed in the service plan that are within the scope of the state's Nurse Practice Act and
are provided by a registered professional nurse, or licensed practical or vocational nurse under
the supervision of a registered nurse, licensed to practice in the state.
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Core Service Definition (Extended State Plan Service)
Services that are provided when nursing services furnished under the approved state plan
limits are exhausted. The scope and nature of these services do not otherwise differ from
nursing services furnished under the state plan. The provider qualifications specified in the
state plan apply. The additional amount of services that may be provided through the
waiver is as follows: (specify)
Instructions
• If skilled nursing services are limited to specific types of nursing services, specify the
types of services in the definition.
• If skilled nursing services are covered under the state plan but the waiver coverage is
different, include the following statement in the service definition: “Skilled nursing
services under the waiver differ in nature, scope, supervision arrangements, or provider
type (including provider training and qualifications) from skilled nursing services in the
state plan.” Also, specify the differences between the waiver coverage and the state plan
coverage. If skilled nursing services are not covered under the state plan, do not include
this statement. Describe the difference between the waiver coverage and the state plan
coverage.
• If skilled nursing services are covered under the waiver only on an “extended state plan
service” basis (e.g., the services furnished differ from the state plan coverage only in
amount, duration and frequency but not scope), employ the alternate service core service
definition.
Guidance
• Skilled nursing is the provision of nursing services on an intermittent or part-time basis.
“Private duty nursing” (see below) entails the provision of nursing services on a
continuous or full-time basis.
• Skilled nursing services that can be furnished under the state plan should be furnished as
services required under EPSDT to waiver participants under age 21.
9. Private Duty Nursing
Background
Private duty nursing is the provision of nursing services on a continuous or full-time basis as
defined in 42 CFR § 440.80. Coverage of private duty nursing services under a waiver may
supplement state plan coverage. There are two core service definitions provided.
Core Service Definition
Individual and continuous care (in contrast to part time or intermittent care) provided by
licensed nurses within the scope of state law. These services are provided to a participant at
home.
Core Service Definition (Extended State Plan Service):
Services that are provided when the limits of private duty nursing furnished under the
approved state plan are exhausted. The scope and nature of these services do not otherwise
differ from private duty nursing services furnished under the state plan. The provider
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qualifications specified in the state plan apply. The additional amount of services that may
be provided through the waiver is as follows: (specify)
Instructions
• If private duty nursing services are limited to specific types of nursing services, specify
the types of services in the definition.
• When private duty nursing services are covered under the state plan but the waiver
coverage is different, include the following statement in the service definition: “Private
duty nursing services under the waiver differ in nature, scope, supervision arrangements,
or provider type (including provider training and qualifications) from private duty
nursing services in the state plan.” Also, specify the differences between the waiver
coverage and the state plan coverage. If private duty nursing services are not covered
under the state plan, do not include this statement. Describe the difference in waiver
coverage and state plan coverage.
• If private duty nursing services are covered under the waiver only on an “extended state
plan service” basis (e.g., the services furnished differ from the state plan coverage only in
amount, duration and frequency but not otherwise), employ the alternate service core
service definition.
Guidance
• As defined in 42 CFR §440.80, private duty nursing is the provision of nursing services
on a continuous or full-time basis. “Skilled nursing” is the provision of nursing services
on a periodic or intermittent basis.
• Private duty nursing services that can be provided under the state plan should be
furnished to waiver participants under age 21 as services required under EPSDT.
10. Adult Foster Care
Background
There is no regulatory definition for adult foster care; however, the service generally entails the
provision of personal care and related supports to a waiver participant in a licensed private home
by a principal care provider who lives in the home. Pursuant to the general prohibition on
coverage of room and board outlined at section 1915(c) of the Act, payment may not be made for
the cost of room and board, including the cost of building maintenance, upkeep and
improvement. The method by which the costs of room and board are excluded from payment for
adult foster care is specified in Appendix I-5.
Core Service Definition
Personal care and supportive services (e.g., homemaker, chore, attendant care, companion,
medication oversight (to the extent permitted under state law)) provided in a licensed (where
applicable) private home by a principal care provider who lives in the home. Adult foster
care is furnished to adults who receive these services in conjunction with residing in the
home. The total number of individuals (including participants served in the waiver) living in
the home, who are unrelated to the principal care provider, cannot exceed [insert number].
Separate payment is not made for homemaker or chore services furnished to a participant
receiving adult foster care services, since these services are integral to and inherent in the
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provision of adult foster care services.
Payments for adult foster care services are not made for room and board, items of comfort
or convenience, or the costs of facility maintenance, upkeep and improvement. Payment for
adult foster care services does not include payments made, directly or indirectly, to
members of the participant's immediate family.
Instructions
• Modify or supplement the core definition to reflect the scope of adult foster care
furnished under the waiver.
• In the core definition, insert the total maximum number of individuals not related to the
caregiver who may reside in the home.
Guidance
• Adult foster care is a residential service that is furnished in the primary caregiver’s own
private home. In some states, these services are entitled “host home services.”
• A state may contract with each primary caregiver for the provision of adult foster care
services and/or contract with agencies that, in turn, contract with and supervise individual
caregivers.
• Adult foster care is considered a residential habilitation service only when habilitation is
included in the defined scope of the adult foster care service. Adult foster care is not
considered a residential habilitation service when habilitation services are furnished in
the adult foster care setting by a different provider and billed separately.
11. Assisted Living Services
Background
There is no regulatory definition for assisted living services; however, they generally entail the
provision of personal care and related supports to waiver participants who reside in a 24-hour
provider-owned and operated setting. Pursuant to the general prohibition on coverage of room
and board outlined at section 1915(c) of the Act, payment may not be made for the cost of room
and board, including the cost of building maintenance, upkeep and improvement. The method
by which the costs of room and board are excluded from payment for assisted living services is
specified in Appendix I-5.
Core Service Definition
Personal care and supportive services (homemaker, chore, attendant services, meal
preparation) that are furnished to waiver participants who reside in a setting that meets the
HCBS setting requirements and includes 24-hour on-site response capability to meet
scheduled or unpredictable resident needs and to provide supervision, safety and security.
Services also include social and recreational programming, and medication assistance (to
the extent permitted under state law). Services that are provided by third parties must be
coordinated with the assisted living provider.
Nursing and skilled therapy services are incidental rather than integral to the provision of
assisted living services. Payment may not be made for 24-hour skilled care. Federal
financial participation is not available for room and board, items of comfort or convenience,
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or the costs of facility maintenance, upkeep and improvement.
Instructions
• Modify or supplement the core definition to reflect the scope of assisted living services
furnished under the waiver.
• Indicate whether payment for assisted living services includes any of the following:
o Home health care
o Physical therapy
o Occupational therapy
o Speech therapy
o Medication administration
o Intermittent skilled nursing services
o Transportation specified in the service plan
o Periodic nursing evaluations
o Other specified services
Guidance
• Note: While this version of the waiver application continues to list “assisted living” as a
service definition, CMS encourages states to use a more accurate name for the service.
The term assisted living describes a setting, not a service. In accordance with 42 CFR §
441.360(b), Medicaid never pays for “assisted living” in the ordinary sense of the
monthly fee to the facility for room, board and services. Medicaid may cover, as a
waiver service, some of the supportive services provided to assisted living residents.
These services may be appropriately titled to reflect their nature and scope.
• Payment for assisted living services may encompass a comprehensive array of services
and supports that are normally furnished on an integrated basis by an assisted living
provider to residents.
• When the scope of assisted living services includes services (e.g., personal care or chore
services) that are also covered as distinct services under the waiver, there must be
mechanisms that ensure, when such services are included in the comprehensive rate that
is paid to the assisted living provider, the services may not also be billed separately.
• When a comprehensive payment is made to a provider for assisted living services, the
provider’s own employees must directly furnish some or all services to residents. The
provider may arrange for the provision of some services on a contractual basis.
• The scope of assisted living services may include services that may be offered through
the state plan to the extent such services are normally furnished as part of a
comprehensive array of on-site assisted living services. However, there must be
mechanisms to ensure that, when such services are included in the comprehensive rate
that is paid to the assisted living provider, the services may not also be billed separately
as state plan services pursuant to the Improper Payments Elimination and Recovery Act
of 2010.
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12. Chore Services
Background
There is no regulatory definition for chore services; however, they generally involve the
completion of household tasks necessary to ensure the health and safety of a waiver participant’s
home environment.
Core Service Definition
Services needed to maintain the home in a clean, sanitary and safe environment. This
service includes heavy household chores such as washing floors, windows and walls,
tacking down loose rugs and tiles, moving heavy items of furniture in order to provide safe
access and egress. These services are provided only when neither the participant nor
anyone else in the household is capable of performing or financially providing for them, and
where no other relative, caregiver, landlord, community/volunteer agency, or third-party
payor is capable of or responsible for their provision. In the case of rental property, the
responsibility of the landlord, pursuant to the lease agreement, is examined prior to any
authorization of service.
Instructions
Supplement or modify the core definition as appropriate to reflect covered service elements/
tasks under the waiver.
13. Adult Companion Services
Background
There is no regulatory definition for adult companion services. They typically entail the
provision of non-medical care, supervision and socialization supports on behalf of an individual
with functional needs.
Core Service Definition
Non-medical care, supervision and socialization, provided to a functionally impaired adult.
Companions may assist or supervise the participant with such tasks as meal preparation,
laundry and shopping. The provision of companion services does not entail hands-on
nursing care. Providers may also perform light housekeeping tasks that are incidental to the
care and supervision of the participant. This service is provided in accordance with a
therapeutic goal in the service plan.
Instructions
• Supplement or modify the core definition as appropriate to reflect the specific covered
service elements under the waiver.
• When the waiver also covers personal care, chore and/or homemaker services, the
definition must describe how the provision of adult companion services does not
duplicate the provision of such services.

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14. Training and Counseling Services for Unpaid Caregivers
Background
There is no regulatory definition for training and counseling services for unpaid caregivers. The
intent of these services is to provide instruction or support to unpaid caregivers on meeting
specific needs or service goals identified in the waiver participant’s person-centered service plan.
Core Service Definition
Training and counseling services for individuals who provide unpaid support, training,
companionship or supervision to participants. For purposes of this service, individual is
defined as any person, family member, neighbor, friend, companion, or co-worker who
provides uncompensated care, training, guidance, companionship or support to a person
served on the waiver. This service may not be provided in order to train paid caregivers.
Training includes instruction about treatment regimens and other services included in the
service plan, use of equipment specified in the service plan, and includes updates as
necessary to safely maintain the participant at home. Counseling must be aimed at assisting
the unpaid caregiver in meeting the needs of the participant. All training for individuals
who provide unpaid support to the participant must be included in the participant’s service
plan.
Instructions
Modify or supplement the core definition to reflect the specific types of training furnished that is
furnished to unpaid persons who support the participant.
Guidance
• Training furnished to persons who provide uncompensated care and support to the
participant must be directly related to their role in supporting the participant in areas
specified in the service plan.
• Counseling similarly must be aimed at assisting unpaid individuals who support the
participant to understand and address participant needs.
• FFP is available for the costs of registration and training fees associated with formal
instruction in areas relevant to participant needs identified in the service plan. FFP is not
available for the costs of travel, meals and overnight lodging to attend a training event or
conference.
15. Consultative Clinical and Therapeutic Services
Background
There is no regulatory definition for consultative clinical and therapeutic services. These
services are intended support unpaid caregivers and/or paid support staff in implementing
treatment plans or goals specified in the waiver participant’s person-centered service plan.
Core Service Definition
Services that assist unpaid caregivers and/or paid support staff in carrying out individual
treatment/support plans, and that are not covered by the Medicaid state plan and are
necessary to improve the individual’s independence and inclusion in their community.
Consultation activities are provided by professionals in psychology, nutrition, counseling
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and behavior management. The service may include assessment, the development of a home
treatment/ support plan, training and technical assistance to carry out the plan and
monitoring of the individual and the provider in the implementation of the plan. This
service may be delivered in the individual’s home or in the community as described in the
service plan.
Instructions
Modify or supplement the core definition to reflect the specific types of consultative services that
are furnished.
Guidance
The purpose of consultative services is to improve the ability of unpaid caregivers and paid
direct support staff to carry out therapeutic interventions.
16. Individual Directed Goods and Services
Background
There is no regulatory definition for individual directed goods and services. They generally
include services, equipment, or supplies that are not otherwise available to the waiver participant
in order to facilitate community integration and/or ensure the waiver participant’s health and
safety. The coverage of this service is limited to waivers that incorporate the budget authority
participant direction opportunity.
Core Service Definition
Services, equipment or supplies not otherwise provided through the Medicaid state plan that
address an identified need in the service plan (including improving and maintaining the
participant’s opportunities for full membership in the community) and meet the following
requirements: the item or service would decrease the need for other Medicaid services;
AND/OR promote inclusion in the community; AND/OR increase the participant’s safety in
the home environment; AND, the participant does not have the funds to purchase the item or
service or the item or service is not available through another source. Individual Directed
Goods and Services are purchased from the participant-directed budget. Experimental or
prohibited treatments are excluded. Individual Directed Goods and Services must be
documented in the service plan.
Instructions
Modify or supplement the core definition to reflect the scope of individual directed goods and
services in the waiver.
Guidance
• The coverage of this service permits a state to authorize the purchase of goods and
services that are not otherwise offered in the waiver or the state plan.
• The coverage of this service is limited to waivers that incorporate the budget authority
participant direction opportunity.
• Goods and services purchased under this coverage may not circumvent other restrictions
on the claiming of FFP for waiver services, including the prohibition against claiming for
the costs of room and board.
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• The specific goods and services that are purchased under this coverage must be
documented in the service plan in accordance with 42 CFR § 441.301 (b)(1)(i).
• The goods and services that are purchased under this coverage must be clearly linked to
an assessed participant need established in the service plan in accordance with 42 CFR §
441.301 (b)(1)(i).
17. Bereavement Counseling
Background
There is no regulatory definition for bereavement counseling. This service is available to the
waiver participant and/or their family members to help them manage the stress associated with
caring for a child with a life-threatening condition.
Core Service Definition
Services provided to the participant and/or family members in order to guide and help them
cope with the participant’s illness and the related stress that accompanies the continuous,
daily care required by a terminally ill child. Enabling the participant and family members to
manage this stress improves the likelihood that the child with a life-threatening condition
will continue to be cared for at home, thereby preventing premature and otherwise
unnecessary institutionalization. Bereavement activities and opportunities for dialogue offer
the family a mechanism for expressing emotion and asking questions about death and
grieving in a safe environment thereby potentially decreasing complications for the family
after the child dies. Bereavement counseling is initiated and billed while the child is on the
waiver but may continue after the death of the child for a period of up to six months.
Instructions
Modify or supplement the core definition to reflect the scope of bereavement counseling in the
waiver.
Guidance
• Bereavement counseling services are associated with waivers that target children with
terminal illnesses.
• Payment for bereavement counseling services may be provided for on-going counseling
to family members after the child’s death so long as such services were initiated prior to
the child’s death. The expected costs of such counseling must be billed in advance.
18. Career Planning
Background
There is no regulatory definition for career planning. The service is intended to assist a waiver
participant in identifying and achieving employment objectives.
Core Service Definition
A person-centered, comprehensive employment planning and support service that provides
assistance for waiver program participants to obtain, maintain or advance in competitive
employment or self-employment. It is a focused, time limited service engaging a participant in
identifying a career direction and developing a plan for achieving competitive, integrated
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employment at or above the state’s minimum wage. The outcome of this service is
documentation of the participant’s stated career objective and a career plan used to guide
individual employment support.
Instructions:
• Supplement or modify the core definition as appropriate to incorporate the specific
service elements furnished in the waiver.
• Supplement the core service definition by specifying where in the community career
planning may be furnished.
• If transportation between the participant's place of residence and the site where career
planning is delivered is provided as a component part of career planning services and the
cost of this transportation is included in the rate paid to providers of career planning
services, the service definition must include a statement to that effect in the definition.
Guidance:
• For young people with disabilities transitioning out of high school or college into adult
services, it is important to have the opportunity to plan for sufficient time and
experiential learning opportunities for the appropriate exploration, assessment and
discovery processes to learn about career options as one first enters the general
workforce.
• Individuals who receive career planning services may also receive educational, supported
employment, pre-vocational and/or day habilitation services. A participant’s personcentered services and supports plan may include two or more types of non-residential
habilitation services. However, different types of non-residential habilitation services
may not be billed during the same period of the day.
• If a waiver participant is receiving prevocational services or day habilitation services,
career planning may be used to develop experiential learning opportunities and career
options consistent with the person’s skills and interests.
• If a waiver participant is employed and receiving either individual or small group
supported employment services, career planning may be used to find other competitive
employment more consistent with the person’s skills and interests or to explore
advancement opportunities in his or her chosen career.
• All prevocational and supported employment service options, including career planning,
should be reviewed and considered as a component of an individual’s person-centered
services and supports plan no less than annually, more frequently as necessary or as
requested by the individual. These services and supports should be designed to support
successful employment outcomes consistent with the individual’s goals.
• Career planning furnished under the waiver may not include services available under a
program funded under section 110 of the Rehabilitation Act of 1973 or section 602(16)
and (17) of the Individuals with Disabilities Education Act (20 U.S.C. 1401(16 and 17)
pursuant to section 1915(c)(5)(C) of the Act and 42 CFR § 440.180(c)(3).
• Career planning may include benefits support, training and planning, as well as
assessment for use of assistive technology to increase independence in the workplace.
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• If a state wishes to cover “career planning” it may choose to include it as a component
part of day habilitation, pre-vocational services or supported employment small group or
individual employment support services or it may be broken out as a separate standalone
service definition.
• Career planning services may be furnished to any individual who requires and chooses
them. They are not limited to persons with intellectual or developmental disabilities.
19. Assistance in Community Integration – Housing Supports
Background
There is no regulatory definition for Assistance in Community Integration – Housing Supports;
however, related guidance regarding community integration can be found in SHO letter # 21001, Opportunities in Medicaid and CHIP to Address Social Determinants of Health (located in
Attachment C).
Core Service Definition
Services that enable participants to maintain their own housing as set forth in the participant’s
approved person-centered service plan. Services must be provided in the home or a community
setting. When not otherwise available, the service may include the following components:
•

•
•
•

•

Conducting a community integration assessment identifying the participant’s preferences
related to housing (type, location, living alone or with someone else, identifying a
roommate, accommodations needed, or other important preferences) and needs for
support to maintain community integration (including what type of setting works best for
the individual, assistance in budgeting for housing/living expenses, assistance in
obtaining/accessing sources of income necessary for community living, assistance in
establishing credit and in understanding and meeting obligations of tenancy).
Assisting participant with finding and securing housing as needed. This may include
arranging for or providing transportation.
Assisting participant in securing supporting documents/records, completing/submitting
applications, securing deposits, and locating furnishings.
Developing an individualized community integration plan based upon the assessment as
part of the overall person-centered service plan. Identify and establish short and longterm measurable goal(s) and establish how goals will be achieved and how concerns will
be addressed.
Participating in person-centered service plan meetings at re-determination and/or
revision plan meetings as needed.
Providing supports and interventions per the person-centered service plan
(individualized community integration portion). Identify any additional supports or
services needed outside the scope of this service and address among the team.
Supports to assist the individual in communicating with the landlord and/or property
manager regarding the participant’s disability (if authorized and appropriate), detailing
accommodations needed, and addressing components of emergency procedures involving
the landlord and/or property manager.
This service will provide supports to preserve the most independent living arrangement
and/or assist the individual in locating the most integrated option appropriate to the
individual.
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Instructions:
Supplement or modify the core definition as appropriate to reflect the specific covered service
elements under the waiver.
C. Extended State Plan Services
Discussion
When a service is included as an extended state plan service, the coverage parameters (e.g.,
nature of the service and provider qualifications) contained in the state plan apply. The coverage
of a state plan service on an extended basis means providing the service in an amount over and
above that permitted under the state plan (e.g., if the plan limits physician visits to three per
month, extended coverage may permit additional visits). When a service is defined in a fashion
that is different from the coverage under the state plan, it is considered an “other service” that is
separately defined in the application. Services that could be covered under the state plan, but
which are not are considered “other services” for the purpose of the waiver application. Extended
state plan services may not supplant medically necessary section 1905(a) Medicaid state plan
services required for eligible individuals under the age of 21 under EPSDT.
Core Service Definition
The following core service definition may be employed for each extended state plan service
included in the waiver:
Extended state plan services under a waiver are provided when the limits of [state plan
service] under the approved state plan are exhausted. The scope and nature of these
services do not otherwise differ from [state plan service] services furnished under the state
plan. The provider qualifications specified in the state plan apply. The additional amount
of services that may be provided through the waiver is as follows: (specify)
Instructions
• Insert the name of the specific state plan service that is offered on an extended basis
under the waiver. Extended state plan services may include but are not limited to:
o Physician services
o Home health care services
o Physical therapy
o Occupational therapy
o Speech, hearing and language services
o Prescribed drugs, except drugs furnished to participants who are eligible for
Medicare Part D benefits
o Dental services
o Other services specified by the state
For each extended state plan service, specify the extent of the extended coverage (e.g.,
the provision of additional therapeutic treatments over and above the amount allowed in
the state plan).
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D. Services in Support of Participant Direction
Discussion
Services in support of participant direction are offered whenever a waiver affords participants the
opportunity to direct some or all of their waiver services. Two core service definitions are
provided: (a) information and assistance in support of participant direction and (b) financial
management services. States may propose additional types of supportive services.
1. Information and Assistance in Support of Participant Direction (Supports Brokerage)
Background
There is no regulatory definition for information and assistance in support of participant
direction. In general, this service is used to assist the waiver participant in developing the skills
necessary to independently direct and manage their waiver services and providers.
Core Service Definition
Service/function that assists the participant (or the participant’s family or representative, as
appropriate) in arranging for, directing and managing services. Serving as the agent of the
participant or family, the service is available to assist in identifying immediate and longterm needs, developing options to meet those needs and accessing identified supports and
services. Practical skills training is offered to enable families and participants to
independently direct and manage waiver services. Examples of skills training include
providing information on recruiting and hiring personal care workers, managing workers
and providing information on effective communication and problem-solving. The
service/function includes providing information to ensure that participants understand the
responsibilities involved with directing their services. The extent of the assistance furnished
to the participant or family is specified in the service plan. This service does not duplicate
other waiver services, including case management.
Instructions
Modify or supplement the core definition to accurately reflect the scope and nature of supports
for participant direction furnished under the waiver.
Guidance
• This service is limited to participants who direct some or all of their waiver services.
• As discussed in the instructions for Appendix E (Participant Direction of Services), the
scope and nature of this service hinges on the type and nature of the opportunities for
participant direct afforded by the waiver.
• Through this service, information may be provided to participant about:
o person centered planning and how it is applied;
o the range and scope of individual choices and options;
o the process for changing the plan of care and individual budget;
o the grievance process;
o risks and responsibilities of self-direction;
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o free of choice of providers;
o individual rights;
o the reassessment and review schedules; and
o such other subjects pertinent to the participant and/or family in managing and
directing services.
Assistance may be provided to the participant with:
o defining goals, needs and preferences, identifying and accessing services, supports
and resources;
o practical skills training (e.g., hiring, managing and terminating workers, problem
solving, conflict resolution)
o development of risk management agreements;
o development of an emergency backup plan;
o recognizing and reporting critical events;
o independent advocacy, to assist in filing grievances and complaints when necessary;
and
o other areas related to managing services and supports.
•

This service may include the performance of activities that nominally overlap the
provision of case management services. In general, such overlap does not constitute
duplicate provision of services. For example, a “support broker” may assist a participant
during the development of a person-centered plan to ensure that the participant’s needs
and preferences are clearly understood even though a case manager is responsible for the
development of the service plan. Duplicate provision of services generally only arises
when exactly the same activity is performed and billed on behalf of a waiver participant.
Where the possibility of duplicate provision of services exists, the participant’s service
plan should clearly delineate responsibilities for the performance of activities.

2. Financial Management Services
Background
There is no regulatory definition for financial management services offered through a 1915(c)
waiver. Generally, this service is available to participants who direct their waivers to facilitate
disbursements of funds available in the participant-directed budget, manage the employment of
staff, and conduct fiscal accounting on behalf of the waiver participant.
Core Service Definition
Service/function that assists the family or participant to: (a) manage and direct the
disbursement of funds contained in the participant-directed budget; (b) facilitate the
employment of staff by the family or participant, by performing as the participant’s agent
such employer responsibilities as processing payroll, withholding federal, state, and local
tax and making tax payments to appropriate tax authorities; and, (c) performing fiscal
accounting and making expenditure reports to the participant or family and state
authorities.
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Instructions
Supplement or modify the core definition to accurately reflect the scope and nature of financial
management services furnished under the waiver.
Guidance
• This service is limited to participants who direct some or all of their waiver services.
• As discussed in the instructions for Appendix E (Participant Direction of Services), the
scope and nature of this service hinges on the type and nature of the opportunities for
participant direct afforded by the waiver. In general, the functions that may be performed
in conjunction with the provision of financial management services include (but are not
necessarily limited to):
Employer Authority
o Assist the participant to verify worker citizenship status
o Collect and process timesheets of support workers
o Process payroll, withholding, filing and payment of applicable federal, state and
local employment-related taxes and insurance
Budget Authority
o Maintain a separate account for each participant’s participant-directed budget
o Track and report participant funds, disbursements and the balance of participant
funds
o Process and pay invoices for goods and services approved in the service plan
o Provide participant with periodic reports of expenditures and the status of the
participant-directed budget
Additional functions/activities
o Execute and hold Medicaid provider agreements as authorized under a written
agreement with the Medicaid agency
o Receive and disburse funds for the payment of participant-directed services under
an agreement with the Medicaid agency or operating agency
o Provide other entities specified by the state with periodic reports of expenditures
and the status of the participant-directed budget
• When financial management services are provided as a waiver service, entities that
perform these services may be deemed by the state to function as an Organized Health
Care Delivery System.
• When entities are not deemed to be an Organized Health Care Delivery System, such
entities should have a written agreement with the Medicaid agency in order to execute
and hold Medicaid provider agreements and receive and disburse funds.
• When financial management services are furnished as a waiver service, the number of
providers may not be limited.
• The waiver may provide that entities which furnish financial management services
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undergo a readiness review as part of the determination that such entities are qualified to
furnish these services.

Appendix D: Participant-Centered Planning
and Service Delivery
Brief Overview
This Appendix addresses the following:
•

Service plan development (Appendix D-1)

•

Service plan implementation and monitoring (Appendix D-2)

Appendix D-1: Service Plan Development
Background
A well-designed process for developing and implementing waiver participant service plans is
perhaps the most critical component of the waiver program. Service planning is the process
through which each waiver participant’s needs, goals and preferences are identified, and
strategies are developed to address those needs, goals and preferences. It is the process through
which the participant exercises choice and control over services and supports and through which
risks are assessed and planned for. A well-designed process incorporates and maximizes the
resources and supports present in the person’s life and community. It is important that the
planning process also enables and supports each participant (and/or family or legal
representative, as appropriate) to fully engage in and direct the planning process to the extent
they choose. It is through the planning process that roles and responsibilities are clarified for
participants who direct their own services.
The service plan (plan of care) identifies the waiver services as well as other services and
supports that a person needs in order to live successfully in the community and, therefore, avoid
institutionalization. In accordance with 42 CFR § 441.301 (b)(1)(i), all waiver services must be
furnished pursuant to a written person-centered service plan that is developed for each waiver
participant. The service plan must reflect the full range of a participant’s service needs and
include both the Medicaid and non-Medicaid services along with informal supports that are
necessary to address those needs. The service plan commits the state to provide the Medicaid
services and supports that are specified in the plan.
FFP may be claimed only for those waiver services that are included in the service plan and may
not be claimed for services furnished prior to the development of the service or for services not
included in the service plan.
When non-waiver services and supports are included in the service plan, the waiver
administering agency is not responsible for ensuring their availability or actual delivery. As
necessary and appropriate, activities should be undertaken to link, refer or advocate for such
services. When non-waiver services and supports are needed to meet the needs of the
participant, their provision must be monitored during the implementation of the service plan.

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CMS regulations at 42 CFR § 441.301(c)(1) require the use of person-centered planning methods
in service plan development. Such methods actively engage and empower the participant and
individuals selected by the participant in leading and directing the design of the service plan and,
thereby, ensure that the plan reflects the needs and preferences of the participant (and/or family,
if applicable).
The person-centered service plan must contain, at a minimum, the elements included at 42 CFR
§ 441.301(c)(2), including: the services that are furnished, the amount and frequency of each
service, and the type of provider to furnish each service. It is not necessary to submit a copy of
the form or forms used to document the service plan along with the application. However, the
form or forms employed must be readily available to CMS upon request through the Medicaid
agency or operating agency (if applicable). The form or forms employed in conjunction with the
waiver must meet the minimum standards just described. Meeting these standards is a condition
of claiming federal financial participation in the cost of waiver services furnished to a waiver
participant.
The service plan must be revised as necessary to add or delete services or modify the amount and
frequency of services. Service plans must be reviewed at least annually or whenever necessary
due to a change in the participant’s needs.
How the waiver assures that service plans address all participants’ assessed needs (including
health and safety risk factors) and personal goals, either by the provision of waiver services or
through other means is one of the six waiver assurances and other requirements that must be
addressed in the quality improvement strategy described throughout the application.
Detailed Instructions for Completing Appendix D-1
Service Plan Title
Instructions
Specify the title that the state has adopted for the service plan and, if applicable, its abbreviation
(e.g., Individual Service Plan (ISP)).
Item D-1-a: Responsibility for Service Plan Development
Instructions
From the choices listed, select who is responsible for service plan development. As applicable,
specify the qualifications of these individuals. Given the importance of the role of the personcentered service plan in HCBS provision, should include for these individuals the training or
competency requirements for the HCBS settings criteria and person-centered plan development.
Technical Guidance
Responsibility for the development of the service plan means ensuring that all applicable policies
and procedures associated with service plan development are carried out. These policies and
procedures include but are not limited to the following: (1) the participant has the opportunity to
engage and/or direct the process to the extent they wish; (2) those whom the participant wishes to
attend and participate in developing the service plan are provided adequate notice; (3) the
planning process is timely; (4) needs are assessed and services meet the needs and, (5) the
responsibilities are identified. It does not mean that the individual who is responsible for service
plan development has decision-making authority over the services included in the plan. The
qualifications of individuals who are responsible for service plan development should be
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reflective of the nature of the waiver’s target population. It is not a federal requirement that
medical professionals (e.g., physicians, nurses) must be responsible for service plan
development.
CMS Review Criteria
The state has specified qualifications of the individuals responsible for service plan
development that reflect the nature of the waiver’s target groups.
Item D-1-b: Service Plan Development Safeguards
Instructions
Indicate whether the entities and/or individuals responsible for the development of the personcentered service plan are permitted to provide other direct (non-case management) services to the
waiver participant, or whether they have an interest in or are employed by a provider of HCBS.
If such entities are permitted to furnish other services, explain how and why they are the only
willing and qualified entity to be responsible for the person-centered service plan, and describe
the safeguards that the state has established to mitigate the potential for conflict of interest in
person-centered service plan development .
Technical Guidance
CMS regulation at 42 CFR § 441.301(c)(1)(vi) requires that providers of HCBS for the
individual, or those who have an interest in or are employed by a provider of HCBS for the
individual must not provide case management or develop the person-centered service plan,
except when the state demonstrates that the only willing and qualified entity to provide case
management and/or develop person-centered service plans in a geographic area also provides
HCBS. In these cases, the state must devise conflict of interest protections including separation
of entity and provider functions within provider entities, which must be approved by CMS.
Individuals must be provided with a clear and accessible alternative dispute resolution process.
The safeguards to mitigate and addresses the potential problems that may arise when the
individual’s HCBS provider, or an entity with an interest in or employed by a provider of HCBS,
performs service plan development (ex. self-referral) need to include, at a minimum:
•

•
•
•
•

Full disclosure to participants and assurance that participants are supported in exercising
their right to free choice of providers and are provided information about the full range of
waiver services, not just the services furnished by the entity that is responsible for the
person-centered service plan development;
An opportunity for the participant to dispute the state’s assertion that there is not another
entity or individual that is not that individual’s provider to develop the person-centered
service plan through a clear and accessible alternative dispute resolution process;
Direct oversight of the process or periodic evaluation by a state agency;
Restricting the entity that develops the person-centered service plan from providing
services without the direct approval of the state; and
Requiring the agency that develops the person-centered service plan to administratively
separate the plan development function from the direct service provider functions.

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CMS Review Criteria
When a state allows for an entity that is responsible for person-centered service plan
development to also provide other direct waiver services, the state has:
•

Demonstrated that the entity is the only willing and qualified provider to develop the
person-centered service plan; and

•

Described safeguards that mitigate and addresses the potential problems that may
arise, with the service providers’ influence on the person-centered planning process
(exercising free choice of providers, controlling the content of the plan, including
assessment of risk, services, frequency and duration, and informing the participant of
their rights) including:
o Full disclosure to participants and assurance that participants are supported in
exercising their right to free choice of providers and are provided information
about the full range of waiver services, not just the services furnished by the
entity that is responsible for the person-centered service plan development;
o An opportunity for the participant to dispute the state’s assertion that there is
not another entity or individual that is not that individual’s provider to
develop the person-centered service plan through a clear and accessible
alternative dispute resolution process;
o Direct oversight of the process or periodic evaluation by a state agency;
o Restricting the entity that develops the person-centered service plan from
providing services without the direct approval of the state; and
o Requiring the agency that develops the person-centered service plan to
administratively separate the plan development function from the direct service
provider functions.

Item D-1-c: Supporting the Participant in Service Plan Development
Instructions
In the text field, specify: (a) the supports and information that are made available to the
participant (and/or family or legal representative, as appropriate) to direct and be actively
engaged in the service plan development process and (b) the participant’s authority to determine
who is included in the process.
Technical Guidance
An effective person-centered service plan development process provides the waiver participant
the opportunity to actively lead and engage in the development of the plan, including identifying
individuals who will be involved in the process. The participant should be furnished supports
that are necessary to enable the participant to actively engage in the planning process, including
providing information about the range of services and supports offered through the waiver in
advance of service plan development and engaging individuals (e.g., a support broker) to assist
the participant or facilitate a person-centered planning process. Participants also may be offered
other education/training opportunities initially and on an ongoing basis.

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CMS Review Criteria
• The participant’s authority to include individuals of his/her choice to participate in the
service plan development process is specified.
• The description identifies the meaningful information and supports that are available to
the participant (or others designated by the participant) to actively engage in and direct
the process.
Item D-1-d-i. Service Plan Development Process
Instructions
In four pages or less (no more than 24,000 characters), provide a comprehensive description of
the process that is used to develop the participant-centered service plan, including: (a) who
develops the plan, who participates in the process, and the timing of the plan; (b) the types of
assessments that are conducted to support service plan development, including securing
information about participant needs, preferences and goals, and health status, including who
conducts the assessments; (c) how the participant is informed of the services that are available
under the waiver; (d) how the plan development process ensures that the service plan addresses
participant goals, needs (including health care needs), and preferences; (e) how waiver and other
services are coordinated and by whom; (f) how the plan development process provides for the
assignment of responsibilities to implement and monitor the plan; and, (g) how and when the
plan is updated, including when the participant’s needs change; and, (h) how the participant
engages in and/or directs the planning process.
Technical Guidance
This item requires furnishing a comprehensive description of the dimensions of the personcentered service plan development process, including the sequence of activities, the integration
of assessment information into service planning, and the distribution of roles and responsibilities.
The next item separately addresses how the service plan development process identifies potential
risks to the participant and how strategies to mitigate risk are incorporated into the service plan.
State laws, regulations, and policies cited in response to this item that affect the service plan
development process must be available to CMS upon request through the Medicaid agency or the
operating agency (if applicable).
When the service plan development process results in an individual being denied the services of
their choice or the providers of their choice, the state must afford the individual the opportunity
to request a fair hearing in accordance with 42 CFR § 431, Subpart E. The fair hearing process
is addressed in Appendix F-1.
When the waiver provides for participant direction opportunities, the response to this item should
identify any activities that are undertaken during the service plan development process that are
specific to participant direction (e.g., furnishing information and assistance in setting up the
participant-directed budget).
When provision is made to develop a temporary interim or provisional service plan in order to
initiate services in advance of the finalization of a full-service plan, describe the procedures used
to develop the interim/provisional plan and the duration of the interim plan (not to exceed 60
days).
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D-1-d-ii. HCBS Settings Requirements for the Service Plan
Instructions
By checking the boxes below in the waiver application, the state is assuring that the following
will be included in the service plan:
•

The setting options are identified and documented in the person-centered service plan and
are based on the individual’s needs, preferences, and, for residential settings, resources
available for room and board.

•

For provider-owned or controlled settings, any modification of the additional conditions
under 42 CFR § 441.301(c)(4)(vi)(A) through (D) must be supported by a specific
assessed need and justified in the person-centered service plan and the following will be
documented in the person-centered service plan:
o A specific and individualized assessed need.
o The positive interventions and supports used prior to any modifications to the
person-centered service plan.
o Less intrusive methods of meeting the need that have been tried but did not work.
o A clear description of the condition that is directly proportionate to the specific
assessed need.
o Regular collection and review of data to measure the ongoing effectiveness of the
modification.
o Established time limits for periodic reviews to determine if the modification is
still necessary or can be terminated.
o Informed consent of the individual.
o An assurance that interventions and supports will cause no harm to the individual.

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CMS Review Criteria
The description of the service plan development process addresses:
•
•
•
•
•
•
•
•
•
•
•
•

•
•

•

Who develops the plan and who participates in the process;
The timing of the plan and how and when it is updated, including in response to changing
circumstances and needs (including how the planning meetings are scheduled at times and
locations convenient to the individual and the person(s) they want to participate);
The types of assessments that are conducted as part of the service plan development
process, including securing information about participant strengths, capacities, needs,
preferences, and desired outcomes, health status, and risk factors;
How participant is informed of services available under the waiver;
How the process ensures that the service plan addresses participant desired outcomes,
needs and preferences;
How responsibilities are assigned for implementing the plan;
How the process addresses participants’ health care needs;
How waiver and other services (i.e., state Plan services and services furnished through
other state and federal programs) are coordinated;
The assignment of responsibility to monitor and oversee the implementation of the service
plan;
How and when the service plan is updated;
How the participant engages in and/or directs the planning process;
If the state uses temporary, interim/provisional service plans to get services initiated until
a more detailed service plan can be finalized, the state has described the procedures for
developing interim/provisional plans and the duration of not more than 60 days for such
plans;
The state has assured that person-centered service plans include the setting options that
are based on the individual’s needs, preferences, and, for residential settings, resources
available for room and board;
The state assured that person-centered service plans include, for provider owned or
controlled settings, any modification of the additional conditions under 42 CFR §
441.301(c)(4)(vi)(A) through (D) that are supported by a specific assessed need and
justified in the person-centered service plan; and
How the state documents consent of the person-centered service plan from the waiver
participant or their legal representative.

Item D-1-e. Risk Assessment and Mitigation
Instructions
In the text field, specify how potential risks to the participant are assessed during the service plan
development process and how strategies to mitigate risk are incorporated into the service plan,
subject to participant needs and preferences. In addition, describe how the service plan
development process addresses backup plans and the arrangements that are used for backup.
Technical Guidance
The presence of risks does not mean that an individual should not be offered waiver services, or
that they should not have decision making authority over their services. The identification of
potential risks to waiver participants and the development of strategies to mitigate such risks are
integral to enabling participants to live as they choose in the community while assuring their
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health and welfare. Critical risks should be addressed during the service plan development
process by incorporating strategies into the plan to mitigate whatever risks may be present.
Methods to identify potential risks may include the use of risk assessment tools/instruments to
systematically identify risks.
Strategies to mitigate risk should be designed to respect the needs and preferences of the waiver
participant. Such strategies might include supports other than waiver services and the use of
individual risk agreements that permit the participant to acknowledge and accept the
responsibility for addressing certain types of risks. When individuals are supported in their own
private residence or other settings where staff might not be continuously available, the service
plan should include a backup plan to address contingencies such as emergencies, including the
failure of a support worker to appear when scheduled to provide necessary services when the
absence of the service presents a risk to the participant’s health and welfare. An effective backup plan is one that is crafted to meet the unique needs and circumstances of each waiver
participant. The response to this item should also describe the types of back-up arrangements
that are employed. Such arrangements may include arranging for designated provider agencies
to furnish staff support on an on-call basis as necessary.
CMS Review Criteria
The waiver describes:
• How risks are assessed.
• How strategies to mitigate risk are incorporated into the service plan in a manner sensitive
to the person’s preferences, including responsibilities and measures for reducing risks.
• The types of back-up arrangements that are used.
• How back-up plans are developed and incorporated into the service plan.
Item D-1-f: Informed Choice of Providers
Instructions
Describe how participants are assisted in obtaining information about and selecting from among
qualified providers of the waiver services in the service plan.
Technical Guidance
Waiver participants have the right to freely select from among any willing and qualified provider
of waiver services (except when an HCBS waiver operates concurrently with a managed care
authority that waives free choice of provider). In order to effectively exercise this right,
participants should have ready access to accessible information about the qualified waiver
providers that are available to furnish the services included in the plan. Such information may be
furnished as part of the service plan development process or by other means (e.g., making
available resource directories in printed form or via the Internet).
CMS Review Criteria
• Participants are initially provided with, and on an ongoing basis have ready access to
accessible information (in a manner consistent with their needs) about choice of qualified
providers and available service providers.
• Participants are supported in selecting providers.

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Item D-1-g: Process for Making Service Plan Subject to the Approval of the Medicaid
Agency
Instructions
In the text field, describe the process by which the service plan is made subject to the approval of
the Medicaid agency.
Technical Guidance
Regulation at 42 CFR § 441.301(b)(1)(i) requires that waiver service plans must be subject to the
approval of the Medicaid agency. This requirement does not mean that the Medicaid agency
must review and approve each and every service plan. While the waiver operating agency or
other entities (e.g., counties) may approve service plans as part of day-to-day waiver operations
when authorized by the Medicaid agency, the Medicaid agency must retain responsibility for
service plan approval and at a minimum must review at least a sample of service plans
retrospectively or employ other methods that ensure that plans have been developed in
accordance with applicable policies and procedures and plans ensure the health and welfare of
waiver participants. This oversight activity is a critical element of the Medicaid agency’s
responsibility to actively oversee the operation of the waiver and ensure health and welfare of
recipients.
When this oversight is conducted through an in-depth review of a sample of service plans,
specify the basis for the size of the sample, how frequently retrospective review is conducted, the
methods for conducting the review, and the persons or entities who conduct the review. The
state sample of service plans must be representative of the demographic makeup of the waiver
population. Reviews may be conducted jointly by the Medicaid agency and the operating agency
as part of the operating agency’s routine oversight. When other methods are employed to satisfy
this requirement, describe the methods that are used and how they ensure that service plans meet
applicable requirements.
CMS Review Criteria
• The process described to review plans indicates that the Medicaid agency exercises
oversight of service plans on a routine and periodic basis. The waiver includes a review
process to ensure a practice of person-centered service planning in accordance with §
441.301(c).
• If an in-depth review of a sample of service plans is conducted, the state has specified the
basis for the sample size, the frequency of these retroactive reviews, review methodology,
and persons/entities who conduct the review. The state ensures that the sample of service
plans is representative of the demographic makeup of the waiver population.
Item D-1-h: Service Plan Review and Update
Instructions
From the choices provided, specify the minimum schedule for the review and update of the
service plan.
Technical Guidance
The service plan is the fundamental tool for assuring the participant’s health and welfare. As
such, it must be subject to periodic review and update. Such reviews determine the ongoing
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appropriateness and adequacy of the services and supports identified in the plan and ensure that
the services furnished are consistent with the nature and severity of the individual's disability and
continue to be responsive to the individual’s needs and preferences. In accordance with 42 CFR
§ 441.301(c)(3), a service plan must be reviewed and updated no less than annually, when the
individual’s circumstances or needs change significantly, or at the request of the individual.
Specify the minimum frequency for reviewing and updating service plans, so long as the
frequency is at least annual. If the frequency is other than the selections offered, specify the
frequency in the “other” selection. A state may provide that the service plans of specific types of
participants are reviewed and updated on different schedules (e.g., the service plan of a person
who has significant medical issues might be reviewed more frequently than the plans of other
participants). A state may not provide for the automatic continuation of service plans. The plan
must be reviewed and updated as necessary.
CMS Review Criteria
The waiver service plan review schedule provides for conducting reviews no less than
annually.
Item D-1-i: Maintenance of Service Plan Forms
Instructions
In the text field, specify the location or locations where copies of the services plan are
maintained.
Technical Guidance
As provided in 45 CFR § 92.42, copies of service plans must be maintained in written or
electronic facsimile form for a period of three years from their ending date (or longer when
required by state law).
CMS Review Criteria
The waiver specifies where copies of service plans are maintained for a period of at least
three years.
Appendix D-2: Service Plan Implementation and Monitoring
Background
In order to assure participant health and welfare and the effective delivery of waiver services,
active, continuous monitoring of the implementation of the service plan is an essential
component of the waiver. The purpose of monitoring is to ensure that waiver services are
furnished in accordance with the service plan, meet the participant’s needs and achieve their
intended outcomes. Monitoring also is conducted to identify any problems related to the
participant’s health and welfare that may require action. In addition to the on-going monitoring
of service plan implementation that most typically is conducted by case management agencies, a
state may specify that other entities perform this monitoring. In addition, states may supplement
service plan monitoring. For example, a state may perform additional monitoring of health and
welfare, satisfaction with services, and the use of behavioral interventions. The state may
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specify a minimum monitoring schedule and/or provide that the monitoring schedule and
methods of monitoring are incorporated into each participant’s service plan. The frequency with
which monitoring is performed may vary based on participant risk factors.
In its quality improvement strategy, the state must describe the discovery, remediation and
improvement processes that it employs to ensure that there is continuous monitoring of the health
and welfare of waiver participants and remediation actions are initiated when appropriate.
Detailed Instructions for Completing Appendix D-2
Item D-2-a: Service Plan Implementation and Monitoring
Instructions
In the text field, specify: (a) the entity (entities) responsible for monitoring the implementation of
the service plan and participant health and welfare; (b) the monitoring and follow-up method(s)
that are used; and (c) the frequency with which monitoring is performed.
Technical Guidance
At a minimum, the description of monitoring methods and processes needs to address the
following:
•
•
•

•
•

The entity or entities responsible for monitoring service plan implementation and
participant health and welfare, and adherence to the HCBS settings criteria under 42 CFR
§ 441.301(c)(4);
The minimum frequency of monitoring, including the frequency of direct, in-person
contact with the participant;
How monitoring methods determine whether:
o Services are furnished in accordance with the service plan;
o Participants have access to waiver services identified in the service plan (e.g., has
the participant encountered problems in securing services authorized in the
service plan?);
o Services meet the needs of the participant;
o Back-up plans are effective;
o Participant health and welfare is assured;
o Participants exercise free choice of providers; and
o Participants have access to non-waiver services identified in the service plan,
including access to health services.
Methods to ensure prompt follow up of identified problems, including problems
identified by participants, service providers and others; and
How information derived from monitoring is compiled and reported to the state.

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CMS Review Criteria
The waiver specifies:
•
•

The entity(ies) responsible for monitoring;
Monitoring methods and frequency to the target population, e.g., including the frequency
of direct, in-person contact with the participant.
How monitoring methods address:
o Services furnished in accordance with the service plan;
o Participant access to waiver services identified in service plan;
o Participants exercise free choice of provider;
o Services meet participants’ needs;
o Effectiveness of back-up plans;
o Participant health and welfare; and
o Participant access to non-waiver services in service plan, including health services.
Methods for prompt follow-up and remediation of identified problems.
Methods for systematic collection of information about monitoring results is compiled,
including how problems identified during monitoring, are reported to the state.

•

•
•

Item D-2-b: Monitoring Safeguards
Instructions
Indicate whether entities and/or individuals that are responsible for monitoring service plan
implementation and participant health and welfare are permitted to provide other direct (non-case
management) services to the same waiver participant because they are the only willing and
qualified entity in a geographic area who can monitor service plan implementation. If such
entities and/or individuals are permitted to furnish other direct waiver services to the same
waiver participant, explain that the HCBS waiver service provider is the only willing and
qualified entity in a geographic area who can monitor service plan implementation for the same
waiver participant and specify the safeguards to mitigate potential conflict of interest in
monitoring of service plan implementation, participant health and welfare, and adherence to the
HCBS settings requirements.
Technical Guidance
As described in 42 CFR § 441.301(c)(1)(vi), providers of HCBS for the individual, or those who
have interest in or are employed by a provider of HCBS, are not permitted to have responsibility
for monitoring the implementation of the service plan for the same waiver participant except, at
the option of the state, when providers are given this responsibility because such individuals are
the only willing and qualified entity in a geographic area, and the state devises conflict of interest
protections/safeguards. Safeguards must be established when entities that furnish direct waiver
services have responsibility for service plan monitoring to avoid problems (e.g., self-monitoring)
that may arise in this circumstance. At a minimum, the safeguards must include:
•

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•

•
•
•

An opportunity for the participant to dispute the state’s assertion that there is not another
entity or individual that is not that individual’s provider to monitor the person-centered
service plan implementation through a clear and accessible alternative dispute resolution
process;
Direct oversight of the process or periodic evaluation by a state agency;
Restriction of the entity that monitors the implementation of the person-centered service
plan from providing services without the direct approval of the state; and
Requirement for the agency that monitors the implementation of the person-centered
service plan to administratively separate the monitoring of service plan implementation
function from the direct service provider functions.

CMS Review Criteria
When service plan monitoring is performed by entities/individuals that furnish direct waiver
services for the same participant because they are the only willing and qualified entity in a
geographic area who can monitor service plan implementation, the safeguards to mitigate
potential conflict of interest in monitoring of service plan implementation, participant health
and welfare, and adherence to the HCBS settings requirements are described.
Quality Improvement: Service Plan
The state demonstrates it has designed and implemented an effective system for reviewing
the adequacy of service plans for the waiver participants.
Service plans address all participants’ assessed needs (including health and safety
risk factors) and personal and community integration goals, either by waiver
services or through other means.
Service plans are updated/revised at least annually, when the individual’s
circumstances or needs change significantly, or at the request of the individual.
Services are delivered in accordance with the service plan, including in the type,
scope, amount, duration, and frequency specified in the service plan.
Participants are afforded choice between/among waiver services and providers.
The state monitors service plan development in accordance with its policies and
procedures.
Instructions
The QIS must describe how the state Medicaid Agency will determine that each waiver
assurance (and its associated component elements) is met. The waiver assurance and
component elements are listed above. For each component element, this description must
include:
•

Activities or processes that are related to discovery and remediation, i.e., review,
assessment or monitoring processes; who conducts the discovery or remediation activities
and with what frequency. These monitoring activities provide the foundation for quality
improvement by generating information regarding compliance, potential problems and
individual corrective actions. The information can be aggregated and analyzed to measure
the overall system performance in meeting the waiver assurances. The types of
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•
•

information used to measure performance, should include relevant quality
measures/indicators.
The entity or entities responsible for reviewing the results (data and information) of
discovery and remediation activities to determine whether the performance of the system
reflects compliance with the assurances; and,
The frequency at which system performance is measured.

Technical Guidance
This QIS element focuses on discovery and remediation activities, that is, processes to assess,
review, evaluate or otherwise analyze a program, process, operation, or outcome. Specifically,
the evidence produced as a result of discovery and remediation activities should provide a clear
picture of the state’s compliance in meeting an assurance.
CMS Review Criteria
• The discovery of compliance with this assurance and the remediation of identified
problems must address how the Medicaid agency assures compliance with the following
service plan sub assurances:
• Service plans address all participants’ assessed needs (including health and
safety risk factors) and personal and community integration goals, either by
waiver services or through other means.
•
•
•
•
•
•

Service plans are updated/revised at least annually or when the individual’s
circumstances or needs change significantly, or at the request of the individual.
Services are delivered in accordance with the service plan, including in the type,
scope, amount, duration, and frequency specified in the service plan.
Participants are afforded choice:
o Between waiver services and institutional care; and
o Between/among waiver services and providers.
The state monitors service plan development in accordance with its policies and
procedures.
How frequently oversight is conducted; and
The entity (or entities) responsible for the discovery and remediation activities,
the state’s method for addressing individual problems as they are discovered,
identifying systemic deficiencies, and implementing remediation actions.

Appendix E: Participant Direction of
Services
Brief Overview
Appendix E addresses how the waiver affords participants the opportunity to direct some or all of
their waiver services. The addition of Appendix E to the waiver application recognizes that
participant direction is an increasingly common feature of waivers. Appendix E facilitates the
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incorporation of participant direction opportunities into any waiver, including waivers where
participants may elect to receive traditional provider-managed services.
There are two parts to this Appendix:
•

Appendix E-1 describes the waiver’s overall approach to participant direction.

•

In Appendix E-2, more detailed information is provided about the specific participant
direction opportunities that are available under the waiver.

Both parts of the Appendix should be completed whenever a waiver incorporates one or both of
the participant direction opportunities (i.e., the Employer Authority and/or Budget Authority) that
are described in more detail below.
CMS urges that all states afford waiver participants the opportunity to direct some or all of
their waiver services. Participant direction of services has been demonstrated to promote
positive outcomes for individuals and families, improve participant satisfaction and be a costeffective service delivery method.
Overview: Participant Direction of Waiver Services
Participant direction of waiver services means that the waiver participant has the authority to
exercise decision making authority over some or all of her/his waiver services and accepts the
responsibility for taking a direct role in managing them. Participant direction is an alternative to
provider management of services wherein a service provider has the responsibility for managing
all aspects of service delivery in accordance with the participant-centered service plan.
Participant direction promotes personal choice and control over the delivery of waiver services,
including who provides services and how they are delivered. For example, the participant may
be afforded the opportunity and be supported to recruit, hire, and supervise individuals who
furnish daily supports as well as to terminate an employee who is not performing in a satisfactory
manner. When a waiver service is provider-managed, a provider selected by the participant
carries out these responsibilities.
Incorporating participant direction into a waiver involves several interrelated dimensions. The
following is an overview of the main dimensions of participant direction under a waiver:
Participant Choice
A waiver may be designed to exclusively serve individuals who want to direct some or all of
their waiver services. When this is the case, there needs to be another program that is available
to individuals who do not wish to direct their services. Alternatively, a waiver may permit
participants to direct some or all of their services or opt instead to receive provider-managed
services exclusively. The waiver application supports both basic waiver designs. When a waiver
exclusively serves persons who want to direct some or all of their waiver services, this design
needs to be reflected in Appendix B-1 (Item B-1-b – additional targeting criteria) and in
Appendix E-1. In Appendix E-1, the waiver may further specify that participant direction
opportunities are limited to individuals who reside in designated types of living arrangements.
Whenever the application refers to the election of participant direction or the exercise of decision
making authority, references to the participant mean: (a) the participant acting independently on
her/his own; (b) the parent(s) of a minor child who is a waiver participant acting on behalf of the
child; (c) a legal representative when the representative has the authority to make pertinent
decisions on behalf of the participant; and, (d) when permitted by the state, a non-legal
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representative who has been freely chosen by the participant to make decisions on the
participant’s behalf.
Geographic Limitation
As discussed in the instructions for Item 4-c (statewideness) in the Application Module
(statewideness), the waiver may make participant direction opportunities available in some but
not all the geographic regions where the waiver is in effect.
Service Specifications
In Appendix C-3, each service offered under the waiver may be specified as provider-managed,
participant-directed, or both. The instructions for Appendix C-3 discuss the considerations
associated with the specification of service delivery method. In general, the exercise of the
participant direction opportunities (authorities) that are discussed below applies only to the
waiver services that have been designated as participant-directed.
Participant Direction Opportunities
Appendix E-1 provides for the selection of two basic participant direction opportunities that may
be made available through a waiver. These opportunities may be and often are used in
combination and are not mutually exclusive. The opportunities are:
•

Participant Employer Authority. Under the Employer Authority, the participant is
supported to recruit, hire, supervise and direct the workers who furnish supports. The
participant functions as the common law employer or the co-employer of these workers.
When the Employer Authority is utilized, the participant rather than a waiver provider
agency carries out employer responsibilities for workers. The dimensions of participant
decision making under the Employer Authority are specified in Appendix E-2-a of the
application; and

•

Participant Budget Authority. Under the Budget Authority, the participant has the
authority and accepts the responsibility to manage a participant-directed budget.
Depending on the dimensions of the budget authority that are specified in Appendix E-2b, this authority permits the participant to make decisions about the acquisition of waiver
goods and services that are authorized in the waiver service plan and to manage the
dollars included in a participant-directed budget.

As noted above, these two authorities are often used in combination to promote full-featured
participant direction of waiver services.
Supports for Participant Direction
When a waiver offers participant direction opportunities, two types of supports should be made
available to facilitate participant direction. These supports may be furnished as a waiver service
(as specified in Appendix C-3) or under another Medicaid payment authority (principally as a
Medicaid administrative activity). Supports furnished as a Medicaid administrative activity must
be in accordance with the approved cost allocation plan. When one or both types of supports are
furnished under another payment authority, they are described in detail in Appendix E-1. These
supports are:
•

Information and Assistance in Support of Participant Direction. These supports are
made available to participants to help them manage their waiver services. For example,
assistance might be provided to help the participant locate workers who furnish direct
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supports or in crafting the service plan. The type and extent of the supports that should
be available to participants depends on the nature of the participant direction
opportunities provided under the waiver.
•

Financial Management Services. These services are furnished 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
when the participant has budget authority. There are two types of FMS services that may
be employed to support participants who exercise the Employer Authority: (1)
Fiscal/Employer Agent (Government or Vendor) where the entity is the agent to the
common law employer who is either the participant or his or her representative or (2)
Agency with Choice, where the participant and the agency function as co-employers of
the participant’s worker(s).
The Internal Revenue Service and the United States Department of Labor (Wage and
Hour Division) have regulations concerning the pay of employees and tax withholding
that may differ based on self-direction program characteristics. It is highly recommended
that the state become familiar with these rules relative to self-direction and assure that
Financial Management Services providers are competent in managing these requirements.
These agencies are available to provide technical assistance to states as needed. It is the
state’s responsibility to ensure that it is operating the waiver consistently with all state
and federal requirements.

While their main purpose is to facilitate participant direction of services, these supports also
provide important protections and safeguards for participants who direct their own waiver
services. More detailed information about each of these dimensions of participant direction is
contained in the item-by-item instructions.
Detailed Instructions for Completing Appendix E
Appendix E needs to be completed when there is an affirmative response to Item 3-E in the
Application Module.
When a concurrent 1915(j) state plan authority authorizes self-direction in the waiver, the state’s
Appendix E should reflect this with the state referring to the 1915(j) in regard to service
definitions, supports for self-direction services and financial management services. Those
services covered solely through the 1915(j) should not be listed in Appendix E and not included
in Appendices C, I and/or J. A service that has both a 1915(j) and non-self-directed 1915(c)
component should be included in all applicable appendices, with cost information based only on
that portion covered by the 1915(c) waiver.
Appendix E: Initial Section
Item: Applicability
Instructions
Indicate whether the waiver provides for one or both of the participant direction opportunities
that are specified in the Appendix. If the response is “no,” do not complete the remainder of the
Appendix. If “yes,” proceed to Appendix E-1. This item in the web-based application is linked
to Item 3-E in Module 1.
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Technical Guidance
As discussed in the technical guidance for item 3-E in the Application Module, this selection
should be made after carefully reviewing these instructions in order to determine the
applicability of this Appendix.
Appendix E-1: Overview
In this Appendix, the following topics are addressed:
•

The waiver’s overall approach to participant direction;

•

The participant direction opportunity or opportunities offered under the waiver;

•

Whether there are limitations on the election of participant direction;

•

The role of representatives in participant direction;

•

The waiver services that may be participant directed along with the participant direction
opportunity or opportunities that apply to each;

•

How the waiver provides for FMS and information and assistance in support of
participant direction;

•

Whether independent advocacy is available to participants who direct their services;

•

The circumstances under which participant direction may be terminated; and,

•

The state’s goals regarding the number of participants who will direct some or all of their
waiver services.

•

The circumstances under which participant direction may be terminated; and

•

The state’s goals regarding the number of participants who will direct some or all of their
waiver services.

Detailed Instructions for Completing Appendix E-1
Item E-1-a: Description of Participant Direction
Instructions
In no more than two pages (12,000 characters), provide an overview description of the
participant direction opportunities that are afforded in the waiver. This overview is intended to
provide CMS with a broad understanding of the waiver’s participant direction opportunities,
including: (a) the nature of the opportunities afforded to participants; (b) how participants may
take advantage of these opportunities; (c) the entities (e.g., support brokers, case management,
financial management services entities) that play a role in supporting individuals who direct their
services and the types of supports that they provide; and, (d) other relevant information about the
waiver’s approach to participant direction that may not be addressed elsewhere in this Appendix
or the remainder of the application.

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CMS Review Criteria
The overview contains a description of all of the following:
•
•
•
•

The participant direction opportunities afforded to waiver participants;
The process by which participants may access these participant direction opportunities;
The entities involved in supporting participant direction; and,
The types of supports that each entity provides.

Item E-1-b: Participant Direction Opportunities
Instructions
Select whether the waiver provides for the Employer Authority, the Budget Authority or both
opportunities for participant direction in combination. When the Employer Authority is selected,
Item E-2-a needs to be completed in Appendix E-2. When the Budget Authority is selected, Item
E-2-b needs to be completed in Appendix E-2. When the “Both Authorities” selection is made,
both Items E-2-a and E-2-b need to be completed in Appendix E-2.
Technical Guidance
In brief, these two opportunities for participant direction entail the following:
•

Employer Authority. Under the Employer Authority, the participant exercises choice
and control over workers who furnish supports. The participant directly selects and
supervises the workers who furnish waiver services to which this authority applies (e.g.,
personal assistance, attendant services). As provided in Item E-2-a, this authority may be
exercised by the participant functioning as the co-employer or the common law employer
of support workers. Item E-2-a specifies the dimensions of participant decision-making
authority under this opportunity. The Employer Authority has been used in its own right
in many waivers in conjunction with the provision of personal assistance, attendant care
and similar services. The principal defining characteristic of this authority is that the
participant functions as the employer of workers.

•

Budget Authority. Under the Budget Authority, the participant exercises decisionmaking authority and management responsibility for a participant-directed budget from
which the participant authorizes the purchase of waiver goods and services that are
authorized in the service plan. The participant also may be afforded the flexibility to shift
funds among authorized services within the total amount of the budget without prior
review and approval (however, changes that affect the service plan must be documented).
Item E-2-b specifies the dimensions of participant decision-making authority under this
opportunity, including how the participant-directed budget is determined. The principal
defining characteristic of this authority is the establishment of a participant-directed
budget. Budget authority usually means that the participant may exercise ongoing
decision making over the mix of waiver services.

Each of these authorities may stand on its own. It is increasingly common practice for waivers
to offer both authorities (i.e., the participant manages a budget and functions as the employer
or co-employer of workers).

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CMS Review Criteria
One or both opportunities must be selected.
Item E-1-c: Availability of Participant Direction by Type of Living Arrangement
Instructions
The waiver may limit participant direction by type of living arrangement. Here, by checking
each choice that applies, specify whether participant direction is available for:
•
•
•

Participants who live with their families or in their own private residence;
Participants who reside in living arrangements where services (regardless of funding
source) are furnished to fewer than four persons who are unrelated to the proprietor (e.g.,
supported living or housing); and/or
Persons who reside in other living arrangements as specified by the state. Such living
arrangements might include assisted living facilities and similar arrangements. This
choice also may be selected when the first two choices do not accurately describe the
living arrangements where participant direction is supported. For example, participant
direction may be supported in some but not all types of smaller living arrangements.
Specify the other types of living arrangements where participant direction is available in
the text field, including the size of these living arrangements (i.e., the number of
individuals who are served in each type of living arrangement).

Technical Guidance
A state has the option to limit opportunities for participant direction by type of participant living
arrangement. Participant direction is commonly associated with individuals who live on their
own or reside with their families. Participant direction may be less feasible when individuals are
served in larger, provider-controlled living arrangements such as group homes. It is up to the
state to decide whether participant direction is supported in some or all types of living
arrangements. However, if the waiver will operate with a concurrent 1915(j) authority, the person
self-directing may not reside in a provider owned or operated home.
There are two implications to limiting participant direction to some but not all types of
participant living arrangements. The first implication is that, although a participant’s service
plan may include one or more waiver services that the state has designated (in Appendix C-3) as
available for participant direction, participant direction of the service(s) will not be made
available to participants who reside in a living arrangement where opportunities for participant
direction are not supported. When participant direction is available in all types of living
arrangements, then all participants regardless of living arrangement may elect to direct any
service that has been designated in Appendix C-3 as participant-directed.
The second implication of limiting participant direction by type of living arrangements is that, in
order to direct their services, participants who reside in living arrangements where participant
direction is not supported must change their living arrangement to a type of living arrangement
where participant direction is supported.

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CMS Review Criteria
When the third choice (other living arrangement) is selected, the waiver specifies the types of
other living arrangements where participant direction is supported.
Item E-1-d: Election of Participant-Direction
Instructions
Select one and only one of the three choices. When the third choice is selected, specify the
additional criteria that are applied in determining whether a participant may direct some or all of
their waiver services. These additional criteria should not include participant living arrangement
(addressed in the foregoing item).
Technical Guidance
A waiver may be designed to serve only individuals who want to direct their services. When this
is the case, select the first choice. If a waiver only serves persons who want to direct their
services (e.g., it is expected that all waiver participants will direct at least some of their waiver
services), Item B-1-b in Appendix B (additional targeting criteria) also needs to specify that the
waiver is limited to individuals who want to direct some or all of their services.
The second selection applies in waivers where participants may elect to direct their waiver
services but also have the option of receiving their waiver services solely on a provider-managed
basis (i.e., the waiver does not solely target persons who want to direct their waiver services) or a
combination of both service delivery options. The waiver must provide that there are
comparable provider-managed services available for participants who elect not to direct their
services. When this choice is selected, the waiver does not impose additional criteria on the
election of participant direction. Any participant may freely elect to direct some or all of their
waiver services.
If the waiver does not support participant direction in some types of living arrangements, then
the election of participant direction choice applies only to participants who reside in living
arrangements where participant direction is supported. The election of participant direction also
is affected by whether a person’s service plan includes services that may be participant-directed,
as specified in Appendix C-3.
The third selection permits specifying whether the election of participant direction is subject to
additional criteria (over and above participant living arrangement, if applicable). For example,
participant direction might not be offered to participants who have substantial cognitive
impairments and who do not have a representative or circle of support to assist in directing their
services. Alternatively, participant direction might not be offered to persons who are involved in
the criminal justice system or exhibit other challenges that require close supervision. A waiver
may reasonably require that participant direction only will be offered to participants who have
received an orientation to participant direction in advance of deciding to direct some or all of
their services.
When additional criteria are specified that have the effect of restricting the participants who may
elect participant direction, state them clearly in the text field. In general, these criteria should not
deny the choice of participant direction based on factors that can be reasonably accommodated
through the provision of information and assistance and other supports that would enable the
participant to direct his/her services. For example, a participant’s lack of experience in directing
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services generally is not a reasonable criterion for not offering participant direction since training
and other supports can be offered to assist the participant to acquire the necessary skills. CMS
urges states not to impose restrictions based on assessment of “ability” or “capacity” that have
the effect of denying opportunity to direct their services based on disability. States will also wish
to consider the Olmstead implications of such exclusions. Under this selection, participants who
are afforded the opportunity to direct their services also must have the option to receive providermanaged services exclusively. A determination not to afford a participant the opportunity to
direct waiver services is not subject to the Fair Hearing process since participant direction is a
method of service delivery and the services that the participant may receive are unaffected when
the opportunity to direct the services is denied.
CMS Review Criteria
When the first choice is selected, the additional targeting criteria in Item B-1-b in Appendix
B-1 specify that the waiver is limited to persons who want to direct their services. When the
third choice is selected, the additional criteria that are used to determine whether a person may
direct some or all of their services:
• Are specified and well-defined.
• Do not include a blanket exclusion of individuals solely on the basis that they have
specific cognitive or other disabilities.
• Do not exclude participants solely on the basis of an assessment that the individual, in
isolation, is unable to carry out some of the responsibilities associated with participant
direction.
Item E-1-e: Information Furnished to Participants
Instructions
In the text field, specify: (a) the information about the participant direction opportunities (e.g.,
the benefits of participant-direction, participant responsibilities, and potential liabilities) that is
provided to the participant (or the participant’s representative) to inform decision-making about
the election of participant direction; (b) the entity or entities responsible for furnishing this
information; and, (c) how and when this information is provided. If the response cites formal
state policies, procedures and/or written materials that are furnished to waiver participants to
inform their decision making, the materials cited need to be readily available to CMS upon
request through the Medicaid agency or the operating agency (if applicable).
Technical Guidance
There are many potential benefits to participants in directing their services. At the same time,
participant direction entails the participant accepting many responsibilities that service providers
usually assume (e.g., recruiting, hiring, supervising and discharging workers) and shouldering
some potential liabilities (which may be mitigated through the provision of supports for
participant direction). As a result, participants should have available timely information about
participant direction to inform their decision making about whether to direct their waiver
services. Information about participant direction may be furnished to participants during the
service plan development process, through conducting separate orientations to participant
direction, and/or by other means (the availability of employer skills training).

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CMS Review Criteria
The waiver:
• Provides that participants are furnished information about the benefits and potential
liabilities associated with participant direction along with information about their
responsibilities when they elect to direct their services.
• Specifies a specific entity or entities that are responsible for furnishing this information.
• Describes the process (e.g., as part of service plan development or by other means) by
which this information is provided to individuals and/or representatives.
• Provides that information is furnished on a timely basis to permit informed decision
making by the participant – i.e., prior to or during entrance to the waiver or as part of
service plan development – allowing sufficient time for the participant to weigh the pros
and cons of participant direction and obtain additional information as necessary before
electing participant direction.
Item E-1-f: Participant Direction by a Representative
Instructions
Select whether waiver services may be directed by a representative on behalf of the waiver
participant and, if so, the type or types of representatives who may direct services. When a
representative who is not a legal guardian may direct services, provide information about the
policies that apply to the role of such representatives.
Technical Guidance
The waiver may provide that services may be directed by a representative on behalf of the
participant. In the case of child (legal minors) waiver participants, parents exercise decision
making on behalf of the child. For the purpose of the application, parents of minor children are
considered to be legal representatives.
The waiver may limit decision making to legal representatives (e.g., legally appointed guardians
of adults) and/or may provide that an individual who is not a legal representative and has been
freely chosen by the participant may direct services in consultation with the participant. With
respect to the latter, non-legal representatives could include a parent of an adult or a spouse who
is not a legal guardian or representative. A non-legal representative also could be another
relative of the participant or a friend of the participant.
When the waiver provides that a non-legal representative may direct services on behalf of the
participant, specify in the text field the state’s policies concerning the appointment of this type of
representative (e.g., a requirement that the participant assign decision-making responsibility by
executing a limited power of attorney) and the extent of the decision-making authority that these
individuals may exercise on behalf of the participant.
When a non-legal representative may serve as a decision maker, the safeguards that ensure the
representative will function in the best interests of the participant also should be specified. An
example of such a safeguard could be that such a representative may not also be paid to provide
waiver services to the participant.

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CMS Review Criteria
The use of representatives to direct waiver services on behalf of a participant is at the discretion
of the state. When waiver services may be directed by a non-legal representative:
•
•

The waiver describes the process for the appointment of this type of representative and
the extent of the decision-making authority exercised by the non-legal representative.
The waiver includes safeguards to ensure that a non-legal representative functions in
the best interests of the participant.

Item E-1-g: Participant Directed Services
Instructions
List in the table the services that are specified in Appendix C-3 as participant-directed. For each
listed service, specify whether the Employer Authority, Budget Authority or both authorities
apply to the service. In the web-based application, this table is auto-populated with the services
that have been specified as participant-directed in Appendices C-1/C-3.
Technical Guidance
See the instructions for Appendix C-3 concerning the designation of a service as participantdirected, provider-managed or both.
CMS Review Criteria
• When the Employer Authority is offered (as specified in Item E-1-b), it applies to at
least one waiver service.
• When the Budget Authority is offered (as specified in Item E-1-b), it applies to at least
one but usually to two or more waiver services.
Overview: Financial Management Services
The next two application items concern Financial Management Services (FMS). FMS are a
critical support for participant direction, especially under the section 1915(c) HCBS waiver
framework. The section 1915(c) waiver authority does not permit making payments for services
directly to a waiver participant, either to reimburse the participant for expenses incurred or
enable the participant to directly pay a service provider. Instead, payments should be made
through an intermediary organization that performs financial transactions (paying for goods and
services or processing payroll for participants’ workers included in the participant’s service plan)
on behalf of the participant.
A FMS entity plays this role when the waiver includes the Employer Authority or Budget
Authority opportunity. Under the Employer Authority, when a participant functions as the
employer of direct support workers, FMS are an important safeguard for participants and
workers alike. The provision of Fiscal/Employer Agent FMS ensures that federal, state and local
employment taxes and labor and workers’ compensation insurance rules related to household
employment and payroll are implemented in an accurate and timely manner and, if included in a
state’s Fiscal/Employer Agent FMS model, that invoices for goods and services included in the
participant’s service plan are paid appropriately and in a timely manner. The provision of
Agency with Choice (co-employer) FMS ensures that the necessary employer-related duties and
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tasks, including payroll, are carried out. FMS provided under these two models is an important
safeguard for participants because it ensures that participants are in compliance with federal and
state tax, labor, workers’ compensation insurance and Medicaid regulations. The term “Financial
Management Services” or “FMS” is used to distinguish this important participant direction
support from the activities that are performed by intermediary organizations that function as
Medicaid fiscal agents.
With respect to each participant direction opportunity, FMS entities generally perform the
following basic functions:
Budget Authority
•

Act as a neutral bank, receiving and disbursing public funds, tracking and reporting on
the participant’s budget funds (received, disbursed and any balances) (Fiscal/Employer
Agent FMS);
• Process and pay invoices for goods and services in the participant’s approved service plan
(Fiscal/Employer Agent FMS); and
• Prepare and distribute reports (e.g., budget status and expenditure reports) to participants
and other entities specified in the waiver (Fiscal/Employer Agent and Agency with
Choice FMS).
Employer Authority
•

Assist the participant in verifying workers’ citizenship or legal alien status (e.g.,
completing and maintaining a copy of the BCIS Form I-9 for each support service worker
the participant employs) (Fiscal/ Employer Agent and Agency with Choice FMS);

•

Collect and processes support worker’s timesheets; (Fiscal/ Employer Agent and Agency
with Choice FMS) and

•

Operate a payroll service, (including withholding taxes from workers’ pay, filing and
paying federal (e.g., income tax withholding, FICA and FUTA), state (e.g., income tax
withholding and SUTA), and, when applicable, local employment taxes and insurance
premiums); and, distribute payroll checks on the participant’s behalf (Fiscal/ Employer
Agent and Agency with Choice FMS).

When specified in the waiver, a FMS entity may perform additional functions, including
executing provider agreements on behalf of the Medicaid agency or brokering and paying
worker’s compensation or other types of insurance premiums on behalf of participants. A
waiver also might provide that the FMS entity furnishes orientation/skills training to
participants about their responsibilities when they function as either the common law employer
or co-employer of their direct support workers. The nature and scope of necessary FMS
hinges on the participant direction opportunities that are available under the waiver. The scope
of FMS is necessarily broader when the waiver provides for both the Employer and Budget
Authorities.
FMS may be furnished as a waiver service. The “Core Service Definitions” attachment to the
Appendix-C instructions includes information and guidance about the coverage of FMS as a
waiver service. FMS also may be provided as a Medicaid administrative activity in
accordance with the approved cost allocation plan. The technical guidance for Item E-1-j
(below) provides more information about this option. As a general matter, under either option,
a FMS entity may furnish the same range of supports to waiver participants who direct their
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services. However, there are some differences between the two ways of underwriting the costs
of FMS under Medicaid. The following table summarizes some of the key differences
associated with funding FMS under either of the payment authorities and may assist in
selecting the option under which FMS are furnished.
FMS: Waiver Service v. Administrative Activity
Payment Authority
Feature

Waiver Service

FFP Rate

State’s Federal Medical
Administrative FFP rate (50%)
Assistance Percentage (FMAP)
rate

FMS Entities

Any provider that meets
qualifications specified in
Appendix C-3

Administrative procurement
(e.g., RFP) – The number of
FMS entities may be limited.

Participant selection of FMS
entity

Free choice of any qualified
FMS provider

Limited to FMS entities
contracted by the state

Contractual relationship
between FMS and state

Medicaid provider agreement
between FMS entity and the
state

Contract between FMS entity
and the state

Organized Health Care
FMS entity may function as an
Delivery System (OHCDS)
OHCDS by virtue of providing
[N.B., See Appendix I-3
a waiver service (FMS)
instructions, Item I-3-g-iii for
a discussion of OHCDS]

Administrative Activity

May function as an OHCDS
when entity meets the criteria
to be designated as OHCDS
(i.e., renders one Medicaid
service directly).

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Provider Agreements (for
services other than FMS)
(see also next section)

Non-OHCDS Arrangement

Medicaid provider agreements
are required for all providers.

Medicaid provider agreements
are required, except for
vendors of non-traditional
OHCDS Arrangement
retail goods and services, as
Medicaid provider agreement
provided in following section
not required except for
entitled “Purchase of Certain
OHCDS entity; other providers Goods and Services through an
need to have an
FMS Entity”
agreement/contract with
OHCDS Arrangement
FMS/OHCDS
Medicaid provider agreement
not required except for
OHCDS entity; other providers
need to have an
agreement/contract with
FMS/OHCDS

Execution of Medicaid
provider agreement

When FMS entity is not an
OHCDS, FMS may execute
provider agreement when
expressly authorized by the
state in accordance with the
Medicaid agency’s standards.

FMS may execute provider
agreement when expressly
authorized by the state in
accordance with the Medicaid
agency’s standards (when
entity is not an OHCDS).

Flow of billings for nonFMS waiver services

OHCDS Arrangement

FMS entity submits billings to
and receives payment from the
state for all services furnished
by providers affiliated with the
OHCDS and with which there
is an agreement/ contract.

Non-OHCDS Arrangement

FMS may function as a limited
fiscal agent when authorized
by the state

Purchase of Certain Goods and Services through an FMS Entity
In some instances, it is more economical and efficient to purchase goods and services on behalf
of participants from vendors on a retail basis. Requiring that there be a formal agreement with
such vendors could prove to be unnecessarily burdensome and delay the acquisition of goods and
services that have been authorized in the service plan. For example, in lieu of securing the
services of a homemaker, it might be more appropriate for a participant to engage a commercial
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cleaning company to perform tasks such as household cleaning. Some types of goods (e.g.,
household appliances) are readily obtainable through retail establishments.
When FMS entities function as an OHCDS, the state may include the provision of goods and
services (when a covered as a service in the waiver) in its provider agreement with such entities.
The FMS may then purchase goods and services authorized in the service plan on the
participant’s behalf and bill the costs of such goods and services to the state. An agreement with
a vendor is not required but there should be documentation to verify the purchase of the good or
service and the goods and services must meet the standards specified in the waiver. Providers of
the goods and services benefit cannot be limited to those FMS entities willing to operate as an
OHCDS.
When FMS entities do not function as an OHCDS (e.g., FMS is funded as an administrative
activity and that entity does not meet the criteria to operate as an OHCDS), the state may
specifically authorize in its agreement with such entities to acquire goods and services from retail
vendors on behalf of the participant. In general, this authorization should only extend to
incidental, non-routine purchases of goods and services on behalf of a waiver participant rather
than services that are regularly provided to the participant. In its agreement with the FMS entity,
the state should require the FMS entity to document such purchases by obtaining receipts or
other documentation to verify that the goods and services were delivered in accordance with the
standards specified in the waiver. The agreement should hold the FMS entity accountable for
such purchases.
Item E-1-h: Financial Management Services
Instructions
Specify whether FMS are provided. If such services are provided, indicate whether they are
provided by governmental or private entities or both (by selecting both types). If the “no”
response is selected, do not complete item E-1-i.
Technical Guidance
In almost all cases, the provision of FMS is a necessary feature of participant direction of waiver
services. A wide range of entities may furnish FMS. When the participant is the common law
employer of his or her worker, a state may choose to provide Fiscal/Employer Agent FMS
directly or use a reporting or subagent through its fiscal intermediary in accordance with Section
3504 of the IRS code and Revenue Procedure 80-4 and Notice 2003-70 (See Attachment D). Or
a state also may choose to provide Fiscal/Employer Agent FMS through vendor organizations
that have the capabilities to perform the required tasks in accordance with Section 3504 of the
IRS code and Revenue Procedure 70-6 (either through a contract or through a Medicaid provider
agreement). When a state elects to furnish FMS solely through governmental entities,
administrative claiming should be employed to underwrite the cost of FMS.
When the participant is a co-employer of his or her worker(s), agencies that support the
philosophy of participant direction may provide Agency with Choice services acting as a coemployer with the participant. A state may allow a FMS entity or a traditional provider
organization to fulfill such a function. In either event, the state should establish qualifications for
agencies with choice.
When a state allows individuals the opportunity for a co-employer arrangement utilizing an
agency with choice model, but utilizes traditional Medicaid payment mechanisms to remit
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payment to the provider (rendering a “no” response in E-1-h appropriate), or when the entity is
more akin to FMS (rendering a “yes” in E-1-h), the state needs to describe in E-2-a.i, the entities
serving as co-employers, the standards and qualifications that the state requires of such entities,
and the safeguards in place to ensure that individuals maintain control and oversight of the
employee.
In addition, states should consider conducting initial FMS readiness reviews and ongoing
performance reviews of their FMS providers to ensure that the FMS providers are providing the
required services in accordance with federal and state requirements.
CMS Review Criteria
The selection is at the discretion of the state. However, it is expected that in nearly all instances
that the “yes” response will be selected. If the no response is selected, then the application
should be reviewed to determine that the selection is appropriate.
Item E-1-i: Provision of Financial Management Services
Instructions
Specify whether FMS are provided as a waiver service or conducted as a Medicaid
administrative activity.
Technical Guidance
As previously noted, FMS may be furnished as a waiver service or performed as a Medicaid
administrative activity. If furnished as Medicaid administrative activity, it must be done in
accordance with the approved cost allocation plan. Cost allocation plans are not approved via
the HCBS Waiver application.
Information needs to be provided about the nature and scope of the activities performed by the
FMS. In particular:
•

Types of Entities. Specify the types of entities that furnish FMS (e.g., Vendor or
Government Fiscal Employer Agent or Agency with Choice provider). See the
discussion of this topic above. States should be cautious about using the Agency with
Choice FMS option to support the Budget Authority, especially with respect to ensuring
that waiver participants can exercise free choice of provider when the entity that serves
as the Agency with Choice also furnishes other waiver services. Also describe the
procurement method that is used to select entities to furnish FMS. When private entities
furnish FMS, the procurement method must meet the requirements that are set forth in
45 CFR §92.42. The description of the procurement method also should include
whether the procurement results in the selection of a single entity or multiple entities to
furnish FMS.

•

Payment for FMS. Specify how entities are compensated for furnishing FMS (e.g., a
per transaction fee, a monthly fee per participant, a combination of both types of fees, or
another method). FMS services may not be compensated on the basis of a percentage of
the total dollar volume of transactions that a FMS entity processes. It is not necessary
to specify the specific amount of the fees that are paid for FMS.

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•

Scope of FMS. This item provides for check offs for the FMS that are furnished in
support of participants who exercise the Employer Authority and the Budget Authority.
The first two sections lists the FMS participant-oriented supports that are related to each
participant direction opportunity as described in the overview of financial management
services above. Select the supports that are provided under each applicable authority.
The final section (“additional administrative functions/activities”) lists additional
activities/functions. As discussed in the instructions for Appendix A, the Medicaid
agency may specifically authorize in writing that another entity (including a FMS
entity) may execute the Medicaid provider agreement. Under such an arrangement, the
FMS entity, for example, may execute the provider agreement with personal assistants
selected by the individual. The second check-off indicates that the FMS functions as a
limited fiscal agent on behalf of the Medicaid agency. That is, the entity processes
billings, receives payment from the Medicaid agency for approved claims and disburses
funds to providers. The final check-off is linked to the Budget Authority. It identifies
whether the FMS prepares and distributes reports about expenditures and the participant
budget to other entities in addition to the participant.
In each case, provision has been made for describing additional supports (e.g., training
participants in worker supervision or maintaining a roster of qualified workers) in
addition to those listed. When additional supports are specified, the activity must be
necessary for the proper and efficient administration of the waiver in order to qualify for
administrative FFP.

•

Oversight of FMS Entities. In the text field, specify: (a) the methods that are used to
monitor and assess the performance of FMS entities, including ensuring the integrity of
the financial transactions that they perform; (b) the entity (or entities) responsible for
performing this monitoring; and (c) how frequently performance is assessed.
Performance monitoring and assessment may include conducting periodic audits of
FMS activities, requiring that FMS entities conduct customer satisfaction surveys and
periodically report the results of such surveys to the state, conducting independent
participant satisfaction surveys, and/or using other methods/procedures.

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CMS Review Criteria
The necessary minimum scope of financial management services hinges on the participant
direction opportunities (Employer and/or Budget Authority) that are available under the
waiver and further specified in Appendix E-2. FMS may be furnished either as a waiver
service (as specified in Appendix C-3) or an administrative activity in accordance with an
approved cost allocation plan (as specified in this item). Regardless of the payment authority
(service or administrative) that is used to underwrite the costs of FMS, the minimum types of
supports that must be furnished to participants under either authority are the same. In
particular:
Employer Authority
The minimum supports that must be furnished are:
• Assist participants in verifying support worker citizenship status;
• Collect and processes timesheets of support workers; and
• Process payroll, withholding, filing and payment of applicable federal, state and local
employment-related taxes and insurance.
Budget Authority
• Maintain a separate account for each participant’s budget.
• Track and report disbursements and balances of participant funds.
• Process and pay invoices for goods and services approved in the service plan
• Provide participant with periodic reports of expenditures and the status of the
participant – directed budget.
When these supports are provided as a waiver service, the specification of FMS in Appendix
C-3 must include the foregoing supports, depending on the participant direction opportunities
available under the waiver. The service specification also must meet all other requirements
associated with service coverage (e.g., freedom of choice of provider).
Criteria Specific to Administrative Claiming
When FMS are furnished as an administrative activity, the following specific review criteria
apply:
•
•
•
•
•
•
•

The types of entities that furnish FMS are specified.
The method of procuring FMS services is specified and comports with the applicable
regulations at 45 CFR § 92.42.
The method of compensating FMS entities is specified.
The scope of the supports the FMS entities provide is specified. When supports over
and above those listed are included, the activities are necessary for the proper and
efficient administration of the waiver.
The method and frequency of assessing the performance of the FMS entities are
specified.
The entities responsible for assessing performance are specified.
The CMS waiver analyst should advise the financial staff that the state has indicated
that it is using administrative claiming. This applies to all Medicaid administrative
claiming activities specified (for example, case management, financial management
services and supports broker). Medicaid administrative claiming must be in
accordance with the approved cost allocation plan. Cost allocation plans are not
reviewed or approved under the 1915(c)-waiver process.

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Information and Assistance in Support of Participant Direction: Overview
In addition to FMS, participants should have access to information and assistance to support
their direction of services. The waiver should provide that these supports are available to
participants; however, in general, participants may elect whether to avail themselves of these
supports and may determine the extent of the support that they require (within any limits
established by the state). The supports that should be available to a participant also depend on
the extent of decision making authority that the participant elects to exercise. For example, if a
participant decides to exercise the Budget Authority but not Employer Authority, only supports
associated with the Budget Authority would pertain to the participant.
The type of information and assistance supports for participant direction that should be made
available hinges on the waiver’s participant direction opportunities and how these opportunities
have been further defined in Appendix E-2. For example, if the waiver provides only for the
employer authority opportunity, the types of supports that should be available will be less
extensive than when both opportunities are offered.
In general, information and assistance should be available to support participants in exercising
each of the specific decision making authorities that are specified for the Employer Authority
(Appendix E-2, Item E-2-a-ii) and/or the Budget Authority (Appendix E-2, Item E-2-b-i). For
example, if the participant has the authority to supervise staff, then support should be available to
assist the participant in exercising this authority (by, for example, making information or training
available concerning worker supervision). Other supports also may be furnished, including
supporting the participant during the service plan development process.
As is the case with FMS, federal financial participation in the costs of information and assistance
in support of participant direction may be claimed as a waiver service or as an administrative
activity. Item E-1-j is structured to identify the payment authority or authorities that are used to
underwrite the costs of these supports as well as specify the types of supports that are furnished.
Item E-1-j: Information and Assistance in Support of Participant Direction
Instructions
Select the payment authority or authorities under which information and assistance in support of
participant direction are furnished. Where required, provide the additional information that is
specified.
Technical Guidance
Information and assistance in support of participant direction may be underwritten in three ways.
More than one payment authority may be used to furnish these supports:
•

Case Management Activity. Information and assistance supports may be furnished as
an element of waiver case management. When case management is covered as a waiver
service, its service specifications in Appendix C-3 should specify the supports that case
managers furnish to participants who direct their services.
When the case management payment authority is employed to underwrite information
and assistance supports, specify in detail the supports that are provided with respect to
each participant direction opportunity under the waiver. When these supports are
furnished as part of the provision of waiver case management services, it is sufficient to
limit this description to a reference to the case management service specifications
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contained in Appendix C-3 so long as those specifications clearly delineate the supports
that are furnished. When case management is provided under another authority, provide a
complete description of the supports that are provided.
•

Waiver Service Coverage. Information and assistance in support of participant direction
may be offered as one or more distinct waiver services. In order to receive FFP for a
waiver service, these service or services must be specified in Appendix C-3, including the
scope of supports that are furnished and provider qualifications. Some states have
covered these supports as “support broker,” “supports brokerage,” or personal agent
services. When these supports are covered as a waiver service, the participant has free
choice from among all willing and qualified providers of these supports and the state
must provide for the enrollment of all qualified providers in accordance with section
1902(a)(23) of the act and 42 CFR § 431.51. In addition, federal financial participation
in the costs of these supports is available at the state’s FMAP rate. When information and
assistance supports are covered as distinct waiver services, enter the title or titles of the
services. Especially with respect to the employer authority opportunity, such supports
may be furnished as part of FMS. If this is the case and FMS also are a waiver service,
specify that FMS is a source of these supports.
When information and assistance supports are covered as a waiver service, they generally
may not be combined with FMS when both are furnished as waiver services. Usually,
both types of support are covered as distinct services. The main exception is that
employer authority-related supports may be included as part of the scope off FMS. When
information and assistance supports are covered as a service distinct from FMS as a
waiver service, FMS providers may furnish information and assistance supports when
they meet applicable qualifications. However, participants may not be required to receive
both FMS and information and assistance supports from the same waiver service
provider.

•

Administrative Activity. Information and assistance supports also may be furnished as a
Medicaid administrative activity, furnished either by Medicaid agency personnel or by
one or more contracted entities. Select this choice when these supports are furnished as
an administrative activity. The considerations in using the administrative payment
authority rather than a service payment authority to underwrite the costs of these supports
are much the same as those that apply to FMS. If furnished as Medicaid administrative
activity, it needs to be done in accordance with the approved cost allocation plan. Cost
allocation plans are not approved via the HCBS waiver application.
When information and assistance supports are furnished as an administrative activity,
specify the types of entities that furnish these supports, how the supports are procured
and compensated; describe in detail the supports that are furnished in conjunction with
each participant direction opportunity under the waiver; and, the responsible entity (or
entities), methods and frequency of assessing the performance of entities that furnish
these supports.

As noted above, the waiver may use more than one payment authority to underwrite the
provision of information and assistance supports. For example, some supports might be
furnished as part of waiver case management and other supports as a distinct waiver service.
When more than one payment authority is used, the state must have controls in place to ensure
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that duplicate claims for federal financial participation are not made for supports that are
furnished to waiver participants.
CMS Review Criteria
Sufficiency of Supports
The scope of information and assistance in support of participant direction needs to align with
the range of participant decision-making authorities specified in Appendix E-2. This
requirement may be met by employing one or more payment authorities. Consequently, the
relevant service specifications in Appendix C-3 and the response to this item may have to be
reviewed in tandem to ascertain whether the overall scope of supports is sufficient.
Criteria Specific to the Provision of Supports as Case Management Activity
•
•

When information and assistance supports are furnished as part of waiver case
management services, the case management service specification identifies the
supports.
When information and assistance supports are furnished as part of state plan services,
the supports are detailed by participant direction opportunity. The nature of the
supports is consistent with the statutory scope of the state plan service and the
coverage of the state plan service contained in the state plan.

Criteria Related to Provision of Information and Assistance Supports as an
Administrative Activity
•
•
•
•
•
•
•
•

The types of entities that furnish information and assistance supports are specified.
The method of procuring information and assistance supports is specified and
comports with applicable regulations at 45 CFR § 92.42.
The method of compensating entities for furnishing information and assistance is
specified.
The scope of information and assistance supports is specified by type of participant
direction opportunity.
The supports are necessary for the proper and efficient administration of the waiver.
The method and frequency of assessing the performance of entities that furnish
information and assistance are specified.
The entity (or entities) responsible for assessing performance is specified.
The CMS waiver analyst should advise the financial staff that the state has indicated
that it is using administrative claiming. This applies to all Medicaid administrative
claiming activities specified (for example, case management, financial management
services and supports broker). Medicaid administrative claiming has to be in
accordance with the approved cost allocation plan. Cost allocation plans are not
reviewed or approved under the 1915(c) waiver process.

Item E-1-k: Independent Advocacy
Instructions
Select whether independent advocacy is available to participants who direct their services. If
such advocacy is available, describe the nature of such advocacy and how participants may
access this support.

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Technical Guidance
Independent advocacy is advocacy that is furnished on behalf of a participant by an individual or
organization that does not provide other direct services (under either the waiver or the state plan)
to the participant, perform assessments, or conduct waiver monitoring, oversight or fiscal
functions that have a direct impact on a participant. Independent advocacy is person-specific
advocacy rather than advocacy that is performed on behalf of a group of individuals collectively.
When independent advocacy is available, participants have a source of neutral assistance
available to them to address problems that may arise with respect to any aspect of their waiver
services, including participant direction. A state may contract for independent advocacy or enter
into agreements with individuals or organizations to furnish this advocacy as needed.
While arranging for access to independent advocacy is encouraged for all waivers, it is not a
general waiver approval requirement. When independent advocacy is available, describe its
nature (including the types of individuals and/or entities that furnish the advocacy) and how
participants may access such advocacy (e.g., by providing information to participants about how
to contact organizations that have agreed to provide such advocacy and the types of
problems/issues for which such organizations provide assistance). This function may be
conducted through an alternate dispute resolution system as specified in Appendix F-2 (if
applicable) or a grievance/complaint system specified in Appendix F-3 (if applicable) provided
that the system is independent.
CMS Review Criteria
The waiver specifies:
• Whether individuals and/or organizations furnish other direct services or perform other
waiver functions that have a direct impact on a participant. If yes, the waiver describes
this independent advocacy and how participants may access it.

Item E-1-l: Voluntary Termination of Participant Direction
Instructions
In the text field, describe how the state accommodates a participant who voluntarily terminates
participant direction in order to receive services through an alternate service delivery method,
including how the state assures continuity of services and participant health and welfare during
the transition from participant direction to the alternative service delivery method.
Technical Guidance
Participants who elect to direct some or all of their services may decide to switch to providermanaged services instead. When a waiver includes participant direction, a state should establish
policies and procedures to accommodate this choice, including processes that ensure the
continuity of the participant’s services and assure the participant’s health and welfare during the
transition period. Such policies and procedures are important participant safeguards. Transition
may be accommodated by timely revision of the service plan and quickly linking the participant
with alternate waiver providers so that there is no break in the delivery of vital services.
When a waiver program targets only individuals who want to direct their services, describe how
individuals who decide to terminate participant direction will be accommodated (e.g., by
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providing for their timely transition to another waiver for which they are eligible or by arranging
for alternate services). In this instance, provision may be made for the use of provider-managed
services during the transition period.
CMS Review Criteria
The waiver describes how:
• The choice to voluntarily terminate participant direction and receive provider-managed
alternative services is accommodated.
• Service continuity is ensured and participant health and welfare is assured during the
transition period.
Item E-1-m: Involuntary Termination of Participant Direction
Instructions
In the text field, specify the circumstances under which the state will involuntarily terminate the
use of participant direction and require the participant to receive provider-managed services
instead, including how continuity of services and participant health and welfare is assured during
the transition.
Technical Guidance
The waiver may provide for the involuntary termination of participant direction of services.
Involuntary termination may be necessary when the participant does not carry out his/her
responsibilities under participant direction. Involuntary termination of participant direction also
may be necessary in order to assure the participant’s health and welfare. The provision of
additional supports may prevent involuntary termination of participant direction. Involuntary
termination of participant direction is not a basis for terminating the person from the waiver
except when a waiver targets only individuals who elect to direct their services. When
termination from the waiver is necessary, the person must be informed of the opportunity to
request a Fair Hearing in accordance with the procedures specified in Appendix F-1.
In this item, specify in detail the circumstances (if any) when participant direction will be
involuntarily terminated and process for transitioning the person to provider-managed services
(e.g., by revising the service plan). Also specify the steps that are taken to ensure continuity of
services that are vital to the participant’s well-being and assure the participant’s health and
welfare during the transition period.
If the waiver targets only persons who elect to self-direct, then provision should be made to
transition the person to another waiver for which the person is eligible or by arranging for
alternate services. In this instance, provision may be made for the use of provider-managed
services during the transition period.
CMS Review Criteria
When participant direction is terminated involuntarily, the waiver specifies:
•

The circumstances under which participant direction is terminated.

•

The safeguards that ensure continuity of services and assure participant health and
welfare during the transition period.

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Item E-1-n: Goals for Participant-Direction
Instructions
In Table E-1-n, specify the state’s goal for the unduplicated number of waiver participants who
are expected to avail themselves of the waiver’s participant direction opportunities. In the case
of a new waiver, numeric goals should be provided for Years 1-3, or Years 1-5 if applicable, that
the waiver is in effect. In the case of a renewal, a goal for each of the five years that the waiver
will be in effect should be provided.
Technical Guidance
The information that is provided in this table will aid CMS in understanding the expected extent
of the use of the waiver’s participant direction opportunities. The use of the term “goal” is
intentional – it recognizes that the use of participant direction opportunities depends on many
factors, including primarily the choices that are made by waiver participants themselves. Over
the duration of the waiver, the goal may be over or underachieved. The goals that a state
establishes are not to be interpreted as a limit on how many individuals may elect to direct their
services (except in the case of waivers that only serve participants who want to self-direct).
Approval of the waiver is not contingent on a minimum number of waiver participants electing
to direct their services.
The “Employer Authority Only” column is used when the waiver provides only for the Employer
Authority. The second column is used when a waiver provides for only the Budget Authority or
the combination of the Budget Authority and the Employer Authority. If the waiver provides
only for the Budget Authority, enter the number of participants who are expected to use that
authority. When a waiver provides for both authorities, enter the number of participants who are
expected to use one or both authorities.
Appendix E-2: Opportunities for Participant Direction
Overview of Topics Addressed in Appendix E-2
Appendix E-2 specifies the dimensions of the Employer Authority and Budget Authority
opportunities for participant direction in the waiver. Item E-2-a is completed when the waiver
offers the Employer Authority opportunity. Item E-2-b is completed when the waiver offers the
Budget Authority opportunity.
Detailed Instructions for Completing Appendix E-2
Item E-2-a: Participant – Employer Authority
Instructions
This item must be completed whenever the waiver offers the Employer Authority participant
direction opportunity, as indicated in Appendix E-1, Item E-1-b.
Item E-2-a-i: Participant Employer Status
Instructions
Select the Co-Employer or Common Law Employer choice or both.
Technical Guidance
There are two ways in which to position the participant to direct staff who provide supports to
the participant:
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•

Co-Employment. Under this approach, the participant is supported by an agency that
functions as the common law employer of workers recruited by the participant. The
participant directs the workers and is considered their co-employer (a.k.a., “managing
employer”). This approach is sometimes termed the “Agency with Choice FMS model.”
The Agency with Choice FMS provider conducts all necessary payroll functions and is
legally responsible for discharging the employment-related functions and duties for
participant-selected workers with the participant based on the roles and responsibilities
identified for the two co-employers. The agency performs financial management services
tasks that are related to the Employer Authority. Under this option, the Agency with
Choice provider must hold a provider agreement with the state in order to submit billings
and receive payments for the waiver services furnished by participant-selected workers or
enter into an administrative services agreement/contract to function as a limited fiscal
agent. An Agency with Choice FMS provider may function solely to support participant
employment of workers or it may provide other employer-related supports to the
participant, including providing traditional agency-based support workers. When the
Agency with Choice FMS option is selected, specify the types of agencies that support
co-employment, the standards and qualifications that the state requires of such entities,
and the safeguards in place to ensure that individuals maintain control and oversight of
the employee.
Common Law Employer. Under this approach, the participant is considered the legally
responsible employer (common law employer) of workers whom he or she (or his or her
representative) hires, supervises and discharges directly. The participant or his or her
representative is liable for the performance of necessary employment-related tasks and
uses a Government or Vendor Fiscal/Employer Agent. When this approach is used, a
FMS entity is engaged to support the participant by performing necessary payroll and
other employment related functions as the participant’s agent in order to ensure that
employer-related legal obligations are fulfilled. This entity must be an IRS-approved
Fiscal/Employer Agent.

•

Indicate which of these approaches are used in the waiver. A waiver may use both approaches.
CMS Review Criteria
•

When the co-employer option is selected, the types of agencies that serve as coemployers are specified as Agency with Choice FMS.

•

The state has mechanisms in place to ensure that individuals maintain authority and
control over employees when opting for a co-employer arrangement, and that the
agency with choice service delivery model truly reflects the key elements of selfdirection.

Item E-2-a-ii. Participant Decision Making Authority
Instructions
Indicate how the participant exercises decision making authority over workers by checking off
the employment-related functions that the participant may perform under the Employer Authority
in the list provided (additional functions may be indicated in text box associated with the “other”
selection).

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Technical Guidance
The employer functions listed are generally self-explanatory. The selection of an employerrelated function means that the participant may conduct the function. The waiver may provide
that the performance of any of the selected functions is a matter of participant choice.
Four of the listed functions warrant additional discussion:
•

Criminal History and/or Background Checks. A state’s policies concerning the
performance of criminal history and/or background checks are described in Appendix C2, Item C-2-a. When the participant is the common law employer, responsibility for
conducting necessary background checks devolves to the participant whenever a
participant-selected worker is subject to such a check under state law. However, a FMS
or other entity may arrange for the background check on behalf of the participant. Under
the Agency with Choice model, the agency is generally responsible for conducting
necessary background checks. In either case, when workers are subject to mandatory
background checks, this item should be checked. When participant-selected workers are
not subject to such mandatory checks, the participant may request that such checks be
conducted. The costs of conducting criminal history and/or background checks may be
compensated as part of the payment to a FMS entity. In general, when such checks are
mandated under state law, the costs of conducting these checks should not be deducted
from the participant-directed budget unless the cost is incorporated into the budget.
Describe how the costs of criminal history and/or background checks are compensated.

•

Additional Staff Qualifications. In Appendix C-3, the provider qualifications for each
service are specified. These qualifications are controlling – that is, providers must meet
these qualifications regardless of whether a service is provider-managed or participantdirected. However, the waiver may provide that the participant may establish additional
staff qualifications based on her/his needs and preferences. For example, if a participant
is hearing-impaired, the participant may specify that workers must be able to sign. So
long as the additional participant-specified qualifications do not contravene the
qualifications set forth in Appendix C-3, they are permissible. See the instructions for
Appendix C-3 for a discussion of policies concerning staff qualifications.

•

Staff Duties. Under the Employer Authority, the participant – like any employer –
exercises authority over workers by specifying their duties – i.e., the specific tasks that
the worker will perform on behalf of the participant. These duties must fall within the
scope of the pertinent service specifications contained in Appendix C-3. For example,
the participant may determine the specific tasks that a personal assistant will perform.
These tasks must fall within the scope of personal assistance services as specified in
Appendix C-3 in order to be considered eligible for Medicaid payment. Tasks that are
outside the scope of a service’s specifications may not be billed to Medicaid.

•

Staff Compensation. The waiver may provide that the participant has the authority to
determine worker wages and benefits. In general, making provision for participantdetermined wages and benefits implies that the participant also has Budget Authority.
When this selection is made, the waiver may make participant decisions regarding worker
wages and benefits subject to applicable state policies. For example, a state may
establish a maximum hourly compensation amount but permit participants to negotiate
hourly compensation rates that are lower than the maximum. Also, a state may provide
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that participant-determined worker wages comport with applicable federal and state wage
laws. When this selection is not made, worker wages and benefits are subject to the rates
that the state establishes for each service.
The selections that are made for this item have important implications for the range of supports
that the waiver makes available to participants who exercise Employer Authority. In general, the
waiver must make support available to participants for each employer-related function that a
participant may perform. This support may take the form of FMS and/or information and
assistance in support of participant direction.
CMS Review Criteria
In order for the waiver to be considered to offer Employer Authority to participants, the
participant should have the authority to conduct the following functions at a minimum:
•
•
•
•
•
•
•
•

Recruit workers;
Hire and discharge staff (common law employer);
Refer for hire and discharge from providing services (co-employer);
Specify staff qualifications including methods used to conduct background checks if
the method varies from the Appendix C-2-a;
Determine staff duties;
Schedule staff;
Supervise staff; and
Evaluate staff performance.

Item E-2-b: Participant – Budget Authority
Instructions
This item must be completed whenever the waiver offers the Budget Authority participant
direction opportunity, as indicated in Appendix E-1, Item E-1-b.
Item E-2-b-i: Participant Decision Making Authority
Instructions
Indicate how the participant exercises control over a participant-directed budget by checking the
decision-making authorities that the participant may exercise under the Budget Authority in the
list provided (additional functions may be indicated in text box associated with the “other”
selection).
Technical Guidance
The selection of a budget control authority means that the participant may exercise decision
making over a wide range of service delivery elements. The waiver may provide that the
exercise of decision making authority for any particular element is a matter of participant choice.
The budget control authorities are generally self-explanatory. With respect to the participant’s
determining the amount paid for a service, specifying additional provider qualifications, or
specifying how services are provided, the considerations are parallel to those identified in the
foregoing instructions for the Employer Authority.
As is the case with the Employer Authority, the selections that are made for this item have
implications for the range of supports that the waiver makes available to participants who
exercise Budget Authority. In general, the waiver must make support available to participants for
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each decision-making authority that a participant may exercise. This support may take the form
of FMS and/or information and assistance in support of participant direction.
CMS Review Criteria
In order for the waiver to be considered to offer Budget Authority to participants, the
participant should at a minimum have the authority to:
• Determine the amount paid for each service in accordance with the state's policies.
• Schedule when services are provided.
• Identify service providers and refer for enrollment.
• Review and approve provider invoices.
Item E-2-b-ii: Participant-Directed Budget
Instructions
In the text field, describe in detail the method(s) that are used to establish the amount of the
participant-directed budget for waiver goods and services over which the participant has
authority, including how the method makes use of reliable cost estimating information and is
applied consistently to each participant. Information about these method(s) must be made
publicly available.
Technical Guidance
The exercise of Budget Authority requires that the participant have a budget in hand to manage.
The participant-directed budget (sometimes termed the individual budget) may encompass all the
services included in a participant’s service plan or only include the services that may be
participant-directed (as provided in Appendix C-3) and that the participant decides to direct. In
the case of the latter, services that fall outside the participant-directed budget are controlled by
the authorizations in the service plan. The description of the budget methodology should clearly
spell out the scope of the participant-directed budget.
The amount of the participant-directed budget may be determined in a variety of ways. For
example, if prospective budget amounts are uniquely assigned to each participant or by level of
support as provided in Appendix C-4, then the participant-directed budget may be based on the
methods that are used to determine those budget amounts. Alternatively, the amount of the
individual budget may be based on the amounts that are authorized in the service plan for the
services that the participant has elected to direct. Other methods can be employed so long as
they are based on reliable cost-estimating methodology that is described in detail. Whatever
method is employed, the waiver must describe how it is applied consistently to each participant
who elects to direct a budget. In addition, the waiver must provide that information about how
the budget methodology is publicly available.

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CMS Review Criteria
The state has specified:
•
•
•
•
•

The basis of the method of determining participant-directed budget.
How the method is rooted in the participant’s service plan, the budget determination
method spelled out in Appendix C-4 (if applicable), or an alternative approach that is
based on reliable cost-estimating techniques.
When the method provides that the budget may vary based on additional factors, the
factors that are used and how they affect the budget.
How the method is applied consistently to each waiver participant.
How information about the budget methodology is made publicly available.

Item E-2-b-iii. Informing Participant of Budget Amount
Instructions
In the text field, describe the process by which the participant is informed of the amount of the
participant-directed budget and the procedures by which the participant may request an
adjustment in the budget amount.
Technical Guidance
The participant must be informed of the amount of his/her budget. This may be done during the
service plan development process or through an alternate means. This information should be
provided to the participant before the service plan is finalized. In addition, the waiver should
include procedures by which the participant may request an adjustment in the budget amount
(e.g., by requesting a review of the service plan). The procedures should be described in this
item, including (if applicable) the policies that the state follows in considering an adjustment to
the budget. When the budget functions as a limit on the amount of waiver goods and services
that a participant may receive, the participant must be offered the opportunity to request a Fair
Hearing when the participant’s request for an adjustment to the budget is denied or the amount of
the budget is reduced.
CMS Review Criteria
The waiver describes:
• How the participant is informed of the budget amount before the service plan is
finalized.
• How the waiver provides for procedures for the participant to request an adjustment in
the budget.
• How participants are afforded the opportunity to request a Fair Hearing when the
participant’s request for a budget adjustment is denied or the amount of the budget is
reduced.
Item E-2-b-iv. Participant Exercise of Budget Flexibility
Instructions
Select whether participants who exercise Budget Authority may modify the services included in
the participant-directed budget without advance approval of a change in the service plan.
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Technical Guidance
The waiver service plan is the official authorization for the provision of waiver services to a
participant. The service plan specifies the services that are furnished to the participant, including
their amount, frequency and duration. The Budget Authority gives the participant control over a
participant-directed budget. Such control implies the ability to reallocate funds among services.
However, the waiver service plan and the participant-directed budget must be kept in alignment.
This may be accomplished in one of two ways:
•

The waiver may permit participants to reallocate funds among services without a prior
change to the service plan so long as the reallocation of funds is documented in the
service plan. If the waiver follows this policy, specify how changes in the participantdirected budget are documented, including updating the service plan. The waiver also
may provide that, under specified circumstances (e.g., the participant wants to make a
major change in the distribution of funds), a change in the budget is subject to prior
review before it takes effect. If so, specify the circumstances when a budget change is
subject to prior review.

•

Alternatively, the waiver may provide that all changes in the participant budget must be
preceded by a change in the service plan. In this instance, the waiver’s procedures for
updating or modifying the service plan are followed.

Budget flexibility may not be employed to permit the purchase of waiver goods and services that
have not been authorized in the service plan. When a participant wishes to purchase waiver
goods and services that are not included in the service plan, the service plan must be modified to
include the desired goods and services, as specified within the waiver’s parameters.
CMS Review Criteria
When the waiver provides that participants have the authority and flexibility to modify the
distribution of funds in the participant-directed budget without prior change to the service
plan, the waiver specifies:
• How the changes to the budget and service plan are documented.
• If applicable, the circumstances when changes are subject to prior review and the
entity responsible for conducting this review.
Item E-2-b-v: Expenditure Safeguards
Instructions
In the text field, describe the safeguards that are in effect for the timely prevention of the
premature depletion of the participant-directed budget or to address potential service delivery
problems that may be associated with budget underutilization and the entity (or entities)
responsible for implementing these safeguards.
Technical Guidance
The waiver must provide safeguards to prevent the premature depletion of the participantdirected budget. Similarly, there should be safeguards to identify potential service delivery
problems that might be associated with budget underutilization (e.g., the participant is unable to
arrange for waiver services). These safeguards may take various forms, including the monitoring
of expenditures by a case manager or support broker; requiring the FMS entity to flag significant
budget variances (over and under expenditures) and bring them to the attention of the participant,
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case manager or support broker; and allocating the budget on a monthly or quarterly basis. The
safeguards should be designed so that budget problems are identified on a timely basis so that
corrective action may be taken, if necessary.
CMS Review Criteria
The waiver describes:
•
•
•
•

Safeguards to prevent the premature depletion of the participant budget or address
potential service delivery problems that may be associated with budget
underutilization.
Identifies the entity (or entities) responsible for ensuring the implementation of
safeguards.
How the safeguards ensure that potential budget problems are identified on a timely
basis.
Safeguards that include flagging potential budget over expenditures or budget
underutilization.

Appendix F: Participant Rights
Brief Overview
Appendix F addresses the following:
•

How participants are afforded the opportunity to request a Fair Hearing (Appendix F-1);

•

Whether there is an alternate dispute resolution process available to participants to appeal
decisions that adversely affect their services (Appendix F-2); and

•

The system (if any) that is available to participants to register grievances and complaints
about their services (Appendix F-3)

Appendix F-1: Opportunity to Request a Fair Hearing
Detailed Instructions for Completing Appendix F-1
Process for Offering Opportunity to Request a Fair Hearing
Instructions
In the text field, describe the policy and procedures under the waiver for informing individuals of
the opportunity to request a fair hearing under the provisions of 42 CFR § 431, Subpart E. The
description needs to include how, when and by whom individuals are informed of fair hearing
procedures during entrance to the waiver. Procedures for notifying individuals of the
opportunity to request a fair hearing must encompass the following adverse actions: (a) not
providing an individual the choice of home and community-based services as an alternative to
institutional care; (b) denying an individual the service(s) of their choice or the provider(s) of
their choice; and, (c) actions to deny, suspend, reduce or terminate services. Include in the
description how notice of an adverse action is given to individuals (e.g., by written notice only or
verbally along with formal written notice). Specify the entity or entities responsible for notifying
individuals and the extent of assistance that is provided to individuals affected by an adverse
action to request a Fair Hearing. Also specify where documentation concerning Fair Hearing
notification is maintained and include references to the notice forms that are employed. As
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appropriate, include in the description references to applicable state laws, regulations and
policies.
Technical Guidance
The opportunity to request a fair hearing is a fundamental protection that is afforded Medicaid
beneficiaries under the provisions of section 1902(a)(3) of the Act. Federal fair hearing
regulations are located in 42 CFR § 431, Subpart E (included in Attachment C to the
Instructions) and are further detailed in Section 2900 of the State Medicaid Manual (also
included in Attachment D). Medicaid Fair Hearing requirements apply to HCBS waivers.
Individuals must be afforded the opportunity to request a fair hearing in all instances when they:
(a) are denied the service(s) of their choice or the provider(s) of their choice; and/or, (b) their
services are denied, suspended, reduced, or terminated.
Individuals must be informed in writing of the procedures for requesting a fair hearing as part of
the waiver entrance process. If entrance to the waiver is denied, the person must be given formal
written notice of the denial and information about how to request a Fair Hearing to appeal the
denial of entrance to the waiver. In order to ensure that the participant is fully informed of their
right to fair hearing, it may be appropriate and even necessary to supplement the written
information with a verbal explanation of the right to fair hearing.
Whenever an action is taken that adversely affects a waiver participant post-enrollment (e.g.,
services are denied, reduced or terminated), the participant must be notified of the action in
writing on a timely basis in advance of the effective date of the action in accordance with 42
CFR § 431.211. In accordance with 42 CFR § 431.210, the notice must include information
about how the participant may appeal the action by requesting a fair hearing. Services may not
be terminated or reduced pending hearing, except as permitted under 42 CFR § 431.230. Copies
of notices must be maintained in the person’s record. It is up to the participant to decide whether
to request a fair hearing.
Ultimate responsibility for compliance with Fair Hearing requirements is vested with the
Medicaid agency. However, the Medicaid agency may elect to delegate aspects of the fair
hearing process to the operating agency as provided in 42 CFR § 431.10. This is often the case
when waiver administration is delegated to counties or local authorities. For example, a state
may offer beneficiaries the option of first pursuing an evidentiary hearing at the local level. In
the event the outcome of that hearing is not satisfactory to the participant, the participant must be
afforded the opportunity to pursue the fair hearing process at the state level. The participant
cannot be required to pursue evidentiary hearing at the local level before requesting a fair
hearing.
Concurrent Managed Care/Section 1915(c) Waiver. When an HCBS waiver operates
concurrently with a concurrent Medicaid managed care authority, access to the fair hearing
process may be affected by whether the state has provided that individuals must first avail
themselves of the internal grievance process that an MCO or PIHP must operate. Indicate in the
response to the item if this is the case and include a reference to the appropriate section of the
managed care authority application.

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CMS Review Criteria
• The description needs to specify how individuals are informed about the fair hearing
process during entrance to the waiver, including how, when and by whom this information
is provided to individuals to ensure that the participant is knowledgeable about their right
to fair hearing.
• The description needs to address all instances when notice must be made to an individual
of an adverse action: choice of provider or service; and denial, reduction, suspension or
termination of service. The description must specify: (a) how notice is made; (b) the entity
or entities responsible for issuing the notice; and (c) the assistance (if any) that is provided
to individuals in pursuing a Fair Hearing.
• The description needs to specify how the participant is informed that services will
continue during the period while the participant’s appeal is under consideration unless the
state is not required to continue the services in accordance with 42 CFR § 431.230.
• The description needs to specify where notices of adverse actions and the opportunity to
request a fair hearing are kept.
Appendix F-2: Additional Dispute Resolution Process
Overview
Many states operate an additional dispute resolution process in addition to the fair hearing
process. This is permissible so long as an individual is not required to use this process as a prerequisite to accessing the Medicaid fair hearing process or the process operates in lieu of the fair
hearing process. To be acceptable, the mechanism must preserve the individual’s right to pursue
a fair hearing in accordance with 42 CFR § 431, Subpart E. In this Appendix, indicate whether
there is an additional dispute resolution process available to individuals and, if so, provide
information about the process.
This item only applies to dispute resolution processes operated by a state agency. In some cases,
dispute resolution processes are entirely local or provider-based. In these cases, it is required
that participants be informed that the right to a Medicaid Fair Hearing is preserved when they
elect to make use of the process.
Detailed Instructions for Completing Appendix F-2
Item F-2-a: Availability of Additional Dispute Resolution Process
Instructions
Select whether there is an additional dispute resolution process. If “yes” is selected, complete
Item F-2-b. If “no,” do not complete Item F-2-b.
Technical Guidance
Section 1915(c) Waivers. Select the “yes” response only if the additional dispute resolution
process operates under the aegis of a state agency (e.g., a state agency operates the process or the
process includes provision for referring disputes from the local level to the state for resolution).
Do not select “yes” if additional dispute resolution processes are entirely local or provider-based.
Also, do not select “yes” if the additional dispute resolution process only involves offering a
person the opportunity for a local evidentiary hearing under the Fair Hearing process. Offering
such hearings should be addressed in Item F-1-b instead.
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Managed Care/1915(c) Concurrent Waivers. Select “yes” when the state contracts with
Managed Care Organizations (MCOs) or Prepaid Inpatient Hospital Plans (PIHPs) for the
provision of waiver services to reflect the requirement that such entities have an internal
grievance system as required by 42 CFR § 438 Subpart H. Also, select “yes” when the state
contracts with Prepaid Ambulatory Health Plans (PAHPs) for the provision of waiver services
and the state elects to operate an optional PAHP grievance procedure as specified in the managed
care authority application.
Item F-2-b: Description of Additional Dispute Resolution Process
Instructions
Describe the additional dispute resolution process, including: (a) the state agency that operates
the process; (b) the nature of the process (i.e., procedures and timeframes), including the types of
disputes addressed through the process; and (c) how the right to a Medicaid fair hearing is
preserved when a participant elects to make use of the process. State laws, regulations, and
policies referenced in the description need to be available to CMS upon request through the
Medicaid agency or the operating agency (if applicable).
In the case of managed care/section 1915(c) concurrent waivers that includes an internal
grievance system or optional grievance procedure, the description may simply reference the
Medicaid managed care authority application.
Technical Guidance
The operation of an additional dispute resolution process over and above the fair hearing process
is not a federal requirement except in the case of certain managed care service delivery models.
This item is included in the application in order to provide a complete picture of the procedural
protections afforded to waiver participants. From a Medicaid perspective, the operation of an
additional dispute resolution process must not impede in any way a person’s opportunity to
request a Fair Hearing.
CMS Review Criteria
When there is an additional dispute resolution process:
• The state agency that operates the dispute mechanism is identified.
• The state describes the types of disputes that can be addressed, including the process and
timelines.
• When a participant elects to make use of the dispute mechanism, the participant is
informed that the dispute resolution mechanism is not a pre-requisite or substitute for a
Fair Hearing.
Appendix F-3: State Grievance/Complaint System
Overview
States often operate grievance and complaint systems that afford waiver participants the
opportunity to identify and seek the resolution of problems and issues with the services that they
receive and/or accessing services that they have been authorized to receive. The operation of
such a system is not mandated under federal regulations. These systems typically address
problems that are outside the scope of the Fair Hearing process (e.g., issues with provider
performance in furnishing a waiver service). The operation of such a system may not in any
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fashion undermine the opportunity of a participant to request a Fair Hearing to address problems
that fall under the scope of the Fair Hearing process. Sometimes these systems are multi-tiered
(e.g., designed to resolve a problem at the local level before the problem is referred to a state
agency). In this Appendix, indicate whether there is a grievance and complaint system available
to individuals and, if so, provide information about the process.
This item only applies to a grievance/complaint system operated by a state agency. In some
cases, there are grievance/complaint systems that are entirely local or provider-based. When this
is the case, participants must be informed that the right to a Medicaid Fair Hearing is preserved
when a participant elects to make use of the process.
Detailed Instructions for Completing Appendix F-3
Item F-3-a: Operation of Grievance/Complaint System
Instructions
Select whether there is a grievance/complaint system that affords participants the opportunity to
register grievances or complaints concerning the provision of services under this waiver. When
there is such a system, complete the remaining two items. If there is not a system, do not
complete the remainder of Appendix F-3.
Technical Guidance
Only select “yes” when the grievance/complaint system is operated by the state (i.e., grievances
or complaints are registered directly with the state) or, if operated at the local or provider agency
level, the system provides for state involvement when the complaint or grievance cannot be
satisfactorily resolved at the local or provider level). Do not select the affirmative response if
grievance/complaint mechanisms are operated entirely locally or by providers with no direct
involvement by a state agency.
Item F-3-b: Operational Responsibility
Instructions
Specify the state agency that is responsible for the operation of the grievance/complaint system.
Technical Guidance
The agency that operates the grievance/complaint system may be the Medicaid agency, the
operating agency, or another state agency (e.g., a state ombudsman office). If more than one
state agency is involved in addressing complaints and grievances, specify each and, in the
response to the next item, distinguish the roles and responsibilities of these agencies in resolving
grievances and complaints.
Item F-3-c: Description of System
Instructions
Describe the grievance/complaint system, including (a) the types of grievances/complaints that
participants may register; (b) the process and timelines for addressing grievances/complaints;
and (c) the mechanisms that are used to resolve grievances/complaints. When multiple entities
are involved in the system, identify the role that each play. Also, specify how the system is
structured to preserve the participant’s opportunity to request a Fair Hearing. State laws,
regulations, and policies that are referenced in the description need to be available when
requested by CMS through the Medicaid agency or the operating agency (if applicable).
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In the case of a managed care/1915(c) concurrent waiver that includes an internal grievance
system or optional grievance procedure, the description may simply reference the Medicaid
managed care application.
CMS Review Criteria
When there is a grievance/complaint system:
• The state agency that operates the grievance/complaint system is identified.
• The state describes the types of complaints that can be addressed, the process and
timelines.
• When a participant elects to file a grievance or make a complaint, the participant is
informed that doing so is not a pre-requisite or substitute for a Fair Hearing.

Appendix G: Participant Safeguards
Brief Overview
Appendix G addresses the following safeguards to assure the health and welfare of waiver
participants:
•
•
•

Response to Critical Events or Incidents (Appendix G-1)
Safeguards Concerning Restraints and Restrictive Interventions (Appendix G-2)
Medication Management and Administration (Appendix G-3)

Appendix G-1 and Appendix G-2 Item C-2-c-ii apply to all waivers. Appendices G-2 (except for
Item C-2-c-ii) and G-3 may not apply to some waivers. See the instructions for these appendices
for a discussion of their applicability.
Appendix G-1: Response to Critical Events or Incidents
Overview
This appendix applies to all waiver programs. It focuses on the identification and follow-up to
critical events or incidents (e.g., abuse, neglect and exploitation) that bring harm, or create the
potential for harm, to a waiver participant. Effective incident management is essential to
assuring the health and welfare of waiver participants. In this appendix, the state describes the
operational features of managing incidents at the individual and provider level as well as its
activities to assure that reports are filed and incidents investigated in a timely fashion and to
analyze incident data (e.g., about specific types of incidents, providers, participant
characteristics, results of investigations, the timeliness of reports and investigations) in order to
develop strategies to reduce the risk and likelihood of the occurrence of incidents in the future.
Detailed Instructions for Completing Appendix G-1
Item G-1-a: Critical Event or Incident Reporting and Management Process
Instructions
Indicate whether the state operates Critical Event or Incident Reporting and Management Process
that enables the state to collect information on sentinel events occurring in the waiver program.

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Item G-1-b: State Critical Event or Incident Reporting Requirements
Instructions
List and briefly define the types of critical events or incidents (including alleged abuse, neglect
and exploitation) that the state requires to be reported for review and follow-up action (e.g., a
follow-up investigation) by an appropriate authority (e.g., child or adult protective services).
Also identify the individuals and/or entities (e.g., waiver providers) that must report such events
and incidents and the reporting method or methods that are employed. Specify the timeframes
for reporting critical events and incidents. The response to this item may include citations of
relevant state laws, regulations, and other published policies. Referenced documents need to be
available through the Medicaid agency or the operating agency (if applicable) upon request by
CMS.
Technical Guidance
This item focuses on critical events or incidents that the state itself deems as sufficiently serious
to warrant near-term review and follow-up by an appropriate authority. Such incidents may
include but are not limited to: (a) abuse and neglect as defined by the state; (b) the unauthorized
use of restraint, seclusion or restrictive interventions; (c) serious injuries that require medical
intervention and/or result in hospitalization; (d) criminal victimization; (e) death; (f) financial
exploitation; (g) medication errors; and, (h) other incidents or events that involve harm or risk of
harm to a participant. In general, the types of critical events and incidents that must be reported
to and monitored by an appropriate authority are specified in state law, regulations or policies.
When the waiver serves both children and adults, specify whether different reporting
requirements apply to children and adults, including who has responsibility to report critical
events or incidents.
CMS Review Criteria
•
•

The state provides for the reporting and investigation of major and serious incidents
(abuse, neglect, and exploitation at a minimum).
The description includes:
o Definitions of the types of critical events or incidents that must be reported;
o Identification of the individuals/entities that must report critical events and incidents;
o The timeframes within which critical events or incidents must be reported; and
o The method of reporting (e.g., phone, written form, web-based reporting system)

Item G-1-c: Participant Training and Education
Instructions
Describe how training and/or information is provided to participants (and involved family or
other unpaid caregivers, as appropriate) concerning the state’s protections from abuse, neglect,
and exploitation, including how participants (or their informal caregivers) can notify appropriate
authorities or entities when the participant may have experienced abuse, neglect or exploitation.
Identify the entity or entities that are responsible for providing this training and/or information
and how frequently training and education are furnished.
Technical Guidance
This item focuses on how participants (and involved family or other unpaid caregivers, as
appropriate) are informed about abuse, neglect and exploitation protections. This might involve
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formal training concerning whom to contact when the participant believes that they have
experienced abuse, neglect or exploitation. Alternatively, information about reporting might be
furnished verbally and/or in written form to the participant and other involved individuals. The
scope of the item does not include training/education that might be furnished to providers or
direct support workers about identifying and reporting abuse, neglect, and exploitation.
CMS Review Criteria
The waiver describes:
•
•
•

How training and/or information are furnished to participants or their informal
caregivers concerning protections from abuse, neglect and exploitation, including how
to notify the appropriate authorities.
The entities responsible for providing training and/or information are specified.
The frequency of providing training and/or information is specified.

Item G-1-d: Responsibility for Review of and Response to Critical Events or Incidents
Instructions
Identify the entity (or entities) to which reports are made of each type of critical event or incident
specified in Item G-1-a above. Describe the methods employed to evaluate critical incident
reports (e.g., determine that follow-up action is required), and the processes and time frames for
responding to critical events or incidents, including conducting investigations.
Technical Guidance
The purpose of this item is to describe how reports of critical events or incidents are reviewed
and how follow-up of reports is performed when warranted. Pursuant to 42 CFR § 441.302(a),
the response must:
•

For each type of critical incident or event identified in Item G-1-a, specify the entity or
entities to which reports are submitted. Such entities might include the state’s adult
protective services agency, the child protective services agency, a licensing authority
and/or a program authority (e.g., the state developmental disabilities agency);

•

Identify the entity that is responsible for evaluating reports (e.g., making a determination
that follow-up is necessary) and how reports are evaluated (e.g., the criteria that are
applied in deciding whether follow-up action is warranted);

•

Identify the entity that is responsible for follow-up investigations and how investigations
are conducted (e.g., whether methods are determined based on severity according to a
prescribed protocol, accommodations that are made for participant interviews);

•

Include the timeframe for conducting and completing an investigation (i.e., how promptly
an investigation is initiated) and the timeframe for completing an investigation (e.g.,
within 48-hours, 7-days, 30-days depending on severity and criticality); and

•

Include the process and time frames for informing the participant (or the participant’s
family or legal representative as appropriate) and other relevant parties (e.g., the waiver
provider, licensing and regulatory authorities, the operating agency) of the investigation
results.

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The description may be structured in any appropriate manner so long as it addresses each of the
elements listed above.
CMS Review Criteria
The waiver specifies:
•
•
•
•
•

The entity (or entities) that receives reports of each type of critical event or incident.
The entity that is responsible for evaluating reports and how reports are evaluated.
The entity that is responsible for conducting investigations and how investigations are
conducted.
The timeframes for conducting an investigation and completing an investigation.
The process and timeframes for informing the participant including the participant (or
the participant’s family or legal representative as appropriate) and other relevant
parties (e.g., the waiver providers, licensing and regulatory authorities, the waiver
operating agency) of the investigation results.

Item G-1-e. Responsibility for Oversight of Critical Incidents and Events
Instructions
In the text field, identify the state agency (or agencies) responsible for overseeing the reporting
of and response to critical incidents or events, how this oversight is conducted and how
frequently.
Technical Guidance
An effective incident management system entails conducting oversight to make sure that
applicable policies and procedures are being followed for the reporting of critical incidents or
events and that necessary follow-up is being conducted on a timely basis. A critical element of
effective oversight is the operation of data systems that support the identification of trends and
patterns in the occurrence of critical incidents or events in order to identify opportunities for
improvement and thus support the development of strategies to reduce the occurrence of
incidents in the future.
Pursuant to 42 CFR § 441.302(a), The response to this item must specify the following:
•

The state agency or agencies responsible for overseeing the operation of the incident
management system. When this responsibility is not carried out directly by the
Medicaid agency and/or the operating agency (if applicable), indicate how the
information and findings from oversight activities are communicated to the Medicaid
agency and/or the operating agency by the state agency (or agencies) responsible for
oversight. Since addressing critical incidents or events is an integral component of
assuring the health and welfare of waiver participants, it is critical that the Medicaid
agency and/or the operating agency (if applicable) play an active role in the oversight of
the operation of the incident management system. For example, if the state’s adult
protective services (APS) agency has primary oversight responsibility for incident
management, there should be processes whereby the APS agency regularly furnishes the
Medicaid agency and/or operating agency with information about critical incidents that

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involve waiver participants and that the agencies work together to identify strategies to
reduce the occurrence of critical incidents.
•

How oversight is conducted. System-wide oversight methods should include gathering
information about types of incidents, participant characteristics, providers, how quickly
reports are reviewed and investigated, how promptly follow-up takes place, the results of
investigations, and whether participants are informed of the investigation results.
Oversight includes using information to reduce the occurrence of incidents in the future.
The response should describe:
o How information about critical incidents and events is collected and compiled so that
it can be analyzed to enable the identification of trends/patterns and the development
of quality improvement strategies to reduce future occurrence of critical incidents or
events. For example, reports may be filed by phone, in written form, or through the
use of information technology, each of which requires specific practices to collect,
compile and analyze the information.
o How information from critical incident reports is used to identify issues within the
waiver population, specific providers at a system-wide level, and how that
information is used to develop strategies to reduce occurrences in the future.
o The frequency of oversight activities.

CMS Review Criteria
The waiver specifies:
•
•
•
•

The state entity or entities responsible for overseeing the operation of the incident
management system.
When oversight is not performed by the Medicaid agency or the operating agency (if
applicable), the process for the oversight agency to communicate information and
findings to the Medicaid agency and/or operating agency.
The methods for overseeing the operation of the incident management system,
including how data are collected, compiled, and used to prevent re-occurrence.
The frequency of oversight activities.

Appendix G-2: Safeguards Concerning Restraints and Restrictive Interventions
Overview
This Appendix concerns the use of restraints and/or restrictive interventions during provision of
waiver services. When either is permitted, pursuant to 42 CFR § 441.302(a), the state must
specify the safeguards that it has established concerning their use and how the state ensures that
such safeguards are followed. Providing effective safeguards in the use of restraints and/or
restrictive interventions is integral to assuring the health and welfare of waiver participants.
When restraints and/or restrictive interventions are not permitted, the state must have a means to
detect unauthorized use. The terms used in this Appendix are defined in the Glossary.

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Detailed Instructions for Completion of Appendix G-2
Item G-2-a: Use of Restraints
Instructions
Select one of the two main choices. If the state does not permit the use of restraints as part of the
provision of waiver services and/or their use is prohibited under state policy, select the first
choice. Also, identify the state agency or agencies that are responsible for detecting the
unauthorized use of restraints and how oversight is performed to ensure that unauthorized use
does not take place. If the use of restraints by a paid caregiver is permitted during the course of
providing waiver services, including in the participant’s private residence, select the second
choice and complete the next two items. Use of restraints must comport with the home and
community-based setting requirements at Section 42 CFR §§ 441.301(c)(4)(iii) and (vi)(F), and
person-centered service planning and plan requirements at 42 CFR §§ 441.301(c)(1) and (c)(2).
Technical Guidance
For the purposes of this item, restraints include personal restraints (e.g., holds), drugs used as
restraints, and mechanical restraints. When a state prohibits the use of restraints during the
delivery of waiver services, it still must have processes that are designed to detect their
unauthorized use. Such processes may include regular monitoring of participant health and
welfare, the performance of periodic provider quality reviews, and an incident management
system in which unauthorized restraint is a reportable incident.
CMS Review Criteria
• When the first choice is selected, the response is consistent with the remainder of the
waiver application.
• When the first choice is selected, the state provides specific methods to detect
unauthorized use of restraints and specifies the state agency (or agencies) responsible
for conducting this oversight.
• Use of restraints must comport with the home and community-based setting
requirements at Section 42 CFR §§ 441.301(c)(4)(iii) and (vi)(F), and person-centered
service planning and plan requirements at 42 CFR §§ 441.301(c)(1) and (c)(2).
Item G-2-a-i: Safeguards Concerning the Use of Restraints
Instructions
Specify the safeguards that have been established concerning the use of each type of restraint
(i.e., personal restraints, drugs used as restraints, mechanical restraints). If state laws, regulations,
and policies are referenced in the response to this item, they need to be available upon request to
CMS through the Medicaid agency or the operating agency (if applicable).
Technical Guidance
When the use of restraints is permitted, identify the types of restraints (i.e., personal restraints,
drugs used as restraints, mechanical restraints) that are allowed and describe in detail the
safeguards that the state has established concerning the use of each type of restraint that is
permitted. If the use of specific types of restraint is explicitly prohibited in policy, identify the
restraints that are not allowed. For example, personal restraints may be permitted but the use of
mechanical restraints prohibited.
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For each type of restraint that is allowed, the safeguards should address:
•

Requirements concerning the use of alternative strategies to avoid the use of restraints;

•

Methods for detecting the unauthorized use of or misapplication of restraints;

•

The protocols that must be followed when restraints are employed (including the
circumstances when their use is permitted and when they are not) and how their use is
authorized;

•

The practices that must be employed in the administration of a restraint to ensure the
health and safety of individuals;

•

Required documentation (record keeping) concerning the use of restraints; and,

•

The education and training requirements that provider agency personnel must meet who
are involved in the administration of a restraint.

CMS Review Criteria
For each type of restraint permitted, the state has identified safeguards that address:
• The use of alternative methods to avoid the use of restraints;
• Methods for detecting the unauthorized use of restraints;
• The protocols that must be followed when restraints are employed (including the
circumstances when their use is permitted) and how their use is authorized;
• The practices that must be employed to ensure the health and safety of individuals;
• Required documentation concerning the use of restraints; and
• Education and training requirements that personnel who are involved in the
administration of restraints must meet.
Item G-2-a-ii: State Oversight Responsibility
Instructions
Specify the state agency (or agencies) responsible for overseeing the use of restraints and
ensuring that state safeguards concerning their use are followed. Describe how this oversight is
conducted and its frequency.
Technical Guidance
•

Identify the state agency (or agencies) responsible for overseeing the use of
restraints and ensuring that state safeguards concerning their use are followed.
When the Medicaid agency or the operating agency (if applicable) does not conduct this
oversight, describe how the results of monitoring the use of restraints are regularly
communicated to the agency that operates the waiver. Since the use of restraints has
potential implications for the health and welfare of waiver participants, it is important
that the agency that administers the waiver be informed and aware of potential violations
of state policies concerning the use of restraints in order for them to undertake
appropriate remedial and system improvement activities.

•

How oversight is conducted. Oversight methods include monitoring the use of
restraints to ensure that all applicable state requirements are followed and to detect
unauthorized, inappropriate/ineffective use or overuse. Oversight methods should include
gathering information about frequency, length of time of each use and the duration of use
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over time as well as the impact of restraints on the individual. Oversight also includes
using information to assure proper use and to reduce the use of restraints in the future.
The response should include:
o How information about restraints is collected and compiled so that it can be analyzed
to enable the identification of trends/patterns and the development of quality
improvement strategies. For example, reports may be filed by phone, in written form,
or through the use of information technology, each of which requires specific
practices to collect and then compile and analyze the information;
o How information about the use of restraints is used to identify issues related to the
waiver populations, providers at the system-wide level and how that information is
used to develop strategies to ensure the proper use and achieve a reduction in the use
of restraints; and
o The frequency of oversight activities.
CMS Review Criteria
The response specifies:
• The state agency (or agencies) responsible for overseeing the use of restraints and
ensuring that the state’s safeguards are followed.
• When oversight is not performed by the Medicaid agency or the operating agency (if
applicable), the process for the oversight agency to communicate information and
findings to the Medicaid agency and/or operating agency.
• Methods for detecting unauthorized use, overuse or inappropriate/ineffective use of
restraints and ensuring that all applicable state requirements are followed.
• How data are analyzed to identify trends and patterns and support improvement
strategies.
• The methods for overseeing the operation of the incident management system
including how data are collected, compiled, and used to prevent re-occurrence.
• The frequency of the oversight activities.
Item G-2-b: Use of Restrictive Interventions
Instructions
Select one of the two main choices. If the state does not permit the use of restrictive
interventions during the provision of waiver services and/or their use is prohibited under state
policy, select the first choice. Also, identify the state agency or agencies that are responsible for
detecting the unauthorized use of restrictive interventions and how oversight is performed to
ensure that unauthorized use does not take place. If the use of restrictive interventions by a paid
provider is permitted during the course of providing waiver services, including in the
participant’s private residence, select the second choice and complete the next two items. Use of
restrictive interventions must comport with the home and community-based setting requirements
at Section 42 CFR §§ 441.301(c)(4)(iii) and (vi)(F), and person-centered service planning and
plan requirements at 42 CFR §§ 441.301(c)(1) and (c)(2).
Technical Guidance
Restrictive interventions limit an individual’s movement; a person’s access to other individuals,
locations or activities, or restrict participant rights. Restrictive interventions also include the use
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of other aversive techniques (not including restraint or seclusion) that are designed to modify a
person’s behavior.
When a state prohibits the use of restrictive interventions during the delivery of waiver services,
pursuant to 42 CFR § 441.302(a), it still must have specific processes that are designed to detect
their unauthorized use.
CMS Review Criteria
• The response is consistent with the remainder of the waiver application.
• When the first choice is selected, the state specifies methods to detect unauthorized
use of restrictive intervention, and the state agency (or agencies) responsible for
conducting this oversight.
• Use of restrictive interventions must comport with the home and community-based
setting requirements at Section 42 CFR §§ 441.301(c)(4)(iii) and (vi)(F), and personcentered service planning and plan requirements at 42 CFR §§ 441.301(c)(1) and
(c)(2).
Item G-2-b-i: Safeguards Concerning the Use of Restrictive Interventions
Instructions
Specify the safeguards that the state has in effect concerning the use of interventions that restrict
participant movement, participant access to other individuals, locations or activities, restrict
participant rights or employ aversive methods (not including restraints or seclusion) to modify
behavior. State laws, regulations, and policies referenced in the specification need to be
available to CMS upon request through the Medicaid agency or the operating agency.
Technical Guidance
The use of restrictive interventions has potential adverse ramifications for the health and welfare
of waiver participants. Consequently, when their use is permitted during the course of the
provision of waiver services, it is important that there be effective safeguards in place to ensure
that such interventions are only used when necessary and are carried out in a manner that avoids
harm to the waiver participant.
When the use of restrictive interventions is permitted during the course of the provision of
waiver services, identify the types of interventions that are allowed (including the circumstances
under which they are allowed) and the types of restrictive interventions that are specifically
prohibited. For example, a state may prohibit the use of aversive methods altogether. Do not
include here restraints or seclusion that already have been addressed in Item G-2-a and G-2-c.
Describe in detail the safeguards that have been established for each type of permitted restrictive
intervention. These safeguards should address:
•

First use of non-aversive methods (i.e., a requirement that aversive methods may only be
employed as a last resort);

•

Methods to detect the unauthorized use of restrictive interventions;

•

Protocols for authorizing the use of restrictive interventions, including treatment planning
requirements and review/reauthorization procedures (including, as applicable the use of
Human Rights Committees);

•

Required documentation (record keeping) when restrictive interventions are used; and
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•

Required education and training of personnel involved in the authorization and
administration of restrictive interventions.

CMS Review Criteria
The response specifies:
•
•

•

The types of restrictive interventions that are permitted, the circumstances under
which they are allowed, and the types of restrictive interventions that are not allowed.
For each type of restrictive intervention that is permitted, the state’s safeguards
address:
o First use of non-aversive methods;
o Methods to detect the unauthorized use of restrictive interventions;
o Protocols for authorizing the use of restrictive interventions, including
treatment planning requirements and review/reauthorization procedures;
o Required documentation when restrictive interventions are used; and
Required education and training of personnel involved in authorization and
administration of restrictive interventions.

Item G-2-b-ii: State Oversight Responsibility
Instructions
Specify the state agency (or agencies) responsible for monitoring and overseeing the use of
restrictive interventions, how this oversight is conducted, and its frequency. When the state does
not permit the use of restrictive interventions, the response to this item should focus on how the
state detects the unauthorized use of restrictive interventions.
Technical Guidance
•

Identify the state agency (or agencies) responsible for overseeing the use of
restrictive interventions and ensuring that state safeguards concerning their use are
followed. When this oversight is not carried out by the Medicaid agency or the operating
agency (if applicable), describe how the results of monitoring the use of restrictive
interventions are regularly communicated to the agency that operates the waiver. Since
use of restrictive interventions has potential implications for the health and welfare of
waiver participants, it is important that the agency that administers the waiver be aware
of potential violations of state policies concerning the use of restrictive interventions in
order for them to undertake appropriate remedial and system improvement activities.

•

How oversight is conducted. Oversight methods include monitoring the use of
restrictive interventions to ensure that all applicable state requirements are followed and
detecting their unauthorized, inappropriate/ineffective use or overuse. Oversight methods
should include gathering information about frequency, length of time of each use and the
duration of use over time as well as the impact of restrictive interventions on the
individual. Oversight also includes using information to assure proper use and to reduce
the use of restrictive interventions in the future. The response should include:
o How information about restrictive interventions is collected and compiled so that it
can be analyzed to enable the identification of trends/patterns and the development of
quality improvement strategies. For example, reports may be filed by phone, in
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written form, or through the use of information technology, each of which requires
specific practices to collect, compile and analyze the information;
o How information about the use of restrictive interventions used to identify issues
related to the waiver populations, providers and at the system-wide level and how that
information is used to develop strategies to ensure the proper use and achieve a
reduction in the use of restrictive interventions in the future; and
o The frequency of oversight activities.
CMS Review Criteria
The waiver specifies:
• The state agency (or agencies) responsible for overseeing the use of restrictive
procedures and ensuring that the state’s safeguards are followed.
• When oversight is not performed by the Medicaid agency or the operating agency (if
applicable), the process for the oversight agency to communicate information and
findings to the Medicaid agency and/or operating agency.
• Methods for detecting unauthorized use, overuse or inappropriate/ineffective use of
restrictive procedures and ensuring that all applicable state requirements are followed.
• How data are analyzed to identify trends and patterns and support improvement
strategies.
• The methods for overseeing the operation of the incident management system
including how data are collected, compiled, and used to prevent re-occurrence.
• The frequency of oversight activities.
Item G-2-c: Use of Seclusion
Instructions
Select one of the two main choices. If the state does not permit the use of seclusion as part of the
provision of waiver services and/or their use is prohibited under state policy, select the first
choice. Also, identify the state agency or agencies that are responsible for detecting the
unauthorized use of seclusion and how oversight is performed to ensure that unauthorized use
does not take place. If the use of seclusion by a paid caregiver is permitted during the course of
providing waiver services, including in the participant’s private residence, select the second
choice and complete the next two items. Use of seclusion must comport with the home and
community-based setting requirements at Section 42 CFR §§ 441.301(c)(4)(iii) and (vi)(F), and
person-centered service planning and plan requirements at 42 CFR §§ 441.301(c)(1) and (c)(2).
Technical Guidance
For the purposes of this item, seclusion means involuntarily isolating an individual as a means of
controlling the person’s behavior. Seclusion is distinguished from “time out” which does not
involve preventing a person from leaving an area and which is considered to be a restrictive
intervention. Consult the Glossary for the definition of the terms used in this item.
When a state prohibits the use of seclusion during the delivery of waiver services, pursuant to 42
CFR § 441.302(a), it still must have processes that are designed to detect their unauthorized use.
Such processes may include regular monitoring of participant health and welfare, the
performance of periodic provider quality reviews, and an incident management system in which
unauthorized seclusion is a reportable incident.
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CMS Review Criteria
• When the first choice is selected, the response is consistent with the remainder of the
waiver application.
• When the first choice is selected, the state provides specific methods to detect
unauthorized use of seclusion and specifies the state agency (or agencies) responsible
for conducting this oversight.
• Use of restrictive interventions must comport with the home and community-based
setting requirements at Section 42 §§ CFR 441.301(c)(4)(iii) and (vi)(F), and personcentered service planning and plan requirements at 42 CFR §§ 441.301(c)(1) and
(c)(2).
Item G-2-c-i: Safeguards Concerning the Use of Seclusion
Instructions
Specify the safeguards that have been established concerning the use of seclusion. If state laws,
regulations, and policies are referenced in the response to this item, they need to be available
upon request to CMS through the Medicaid agency or the operating agency (if applicable).
Technical Guidance
When the use of seclusion is permitted, describe in detail the safeguards that the state has
established concerning the use of seclusion that is permitted. The safeguards should address:
•

Requirements concerning the use of alternative strategies to avoid the use of seclusion;

•

Methods for detecting the unauthorized use of or misapplication of seclusion;

•

The protocols that must be followed when seclusion is employed (including the
circumstances when it is permitted and when it is not) and how its use is authorized;

•

The practices that must be employed in the administration of seclusion to ensure the
health and safety of individuals;

•

Required documentation (record keeping) concerning the use of seclusion; and,

•

The education and training requirements that provider agency personnel must meet who
are involved in the administration of seclusion.

CMS Review Criteria
For each type of seclusion permitted, the state has identified safeguards that address:
• The use of alternative methods to avoid the use of seclusion;
• Methods for detecting the unauthorized use of seclusion;
• The protocols that must be followed when seclusion is employed (including the
circumstances when its use is permitted) and how its use is authorized;
• The practices that must be employed to ensure the health and safety of individuals;
• Required documentation concerning the use of seclusion; and
• Education and training requirements that personnel who are involved in the
administration of seclusion must meet.

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Item G-2-c-ii: State Oversight Responsibility
Instructions
Specify the state agency (or agencies) responsible for overseeing the use of seclusion and
ensuring that state safeguards concerning its use is followed. Describe how this oversight is
conducted and its frequency.
Technical Guidance
•

Identify the state agency (or agencies) responsible for overseeing the use of seclusion
and ensuring that state safeguards concerning its use is followed. When the Medicaid
agency or the operating agency (if applicable) does not conduct this oversight, describe
how the results of monitoring the use of seclusion are regularly communicated to the
agency that operates the waiver. Since the use of seclusion has potential implications for
the health and welfare of waiver participants, it is important that the agency that
administers the waiver be informed and aware of potential violations of state policies
concerning the use of seclusion in order for them to undertake appropriate remedial and
system improvement activities.

•

How oversight is conducted. Oversight methods include monitoring the use of
seclusion to ensure that all applicable state requirements are followed and to detect
unauthorized, inappropriate/ineffective use or overuse. Oversight methods should include
gathering information about frequency, length of time of each use and the duration of use
over time as well as the impact of seclusion on the individual. Oversight also includes
using information to assure proper use and to reduce the use of seclusion in the future.

•

The response should include:
o How information about seclusion is collected and compiled so that it can be
analyzed to enable the identification of trends/patterns and the development of
quality improvement strategies. For example, reports may be filed by phone, in
written form, or through the use of information technology, each of which
requires specific practices to collect and then compile and analyze the
information;
o How information about the use of seclusion is used to identify issues related to the
waiver populations, providers at the system-wide level and how that information
is used to develop strategies to ensure the proper use and achieve a reduction in
the use of seclusion; and
o The frequency of oversight activities.

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CMS Review Criteria
The response specifies:
• The state agency (or agencies) responsible for overseeing the use of seclusion and
ensuring that the state’s safeguards are followed.
• When oversight is not performed by the Medicaid agency or the operating agency (if
applicable), the process for the oversight agency to communicate information and
findings to the Medicaid agency and/or operating agency.
• Methods for detecting unauthorized use, overuse or inappropriate/ineffective use of
seclusion and ensuring that all applicable state requirements are followed.
• How data are analyzed to identify trends and patterns and support improvement
strategies.
• The methods for overseeing the operation of the incident management system
including how data are collected, compiled, and used to prevent re-occurrence.
• The frequency of the oversight activities.
Appendix G-3: Medication Management and Administration
Overview
This section addresses two distinct topics: (a) medication management, which means the review
of waiver participant medication regimens (e.g., the appropriateness of the medications that a
person receives) and (b) medication administration (the administration of medications to
participants who are unable to administer their own medications by waiver providers). Both of
these topics have potential ramifications for the health and welfare of waiver participants.
Detailed Instructions for Completing Appendix G-3
Item G-3-a: Applicability
Instructions
Select whether this section applies to the waiver. If it applies, then complete the remainder of
the section. If not, do not complete the rest of the section.
Technical Guidance
Pursuant to 42 CFR § 441.302(a), this question must be completed when waiver services are
furnished to participants who are served in licensed or unlicensed living arrangements where a
provider has round-the-clock responsibility for the health and welfare of residents. The question
does not need to be completed when waiver participants are served exclusively in their own
private residences or in the home of a family member. However, a state may include this
Appendix if it wishes. This may be the case when supporting waiver participants who live in
their own private residences or the home of a family member entails the involvement of waiver
providers in the management and/or administration of their medications.
Item G-3-b: Medication Management and Follow-Up
Medication management means the review of a participant’s full medication regimen to ensure
its appropriateness. When individuals receive medications for the purpose of modifying or
controlling behavior, the state is expected to have policies and procedures concerning the
effective use and management of such medications. Medication management also is relevant

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when a participant receives multiple medications in order to guard against over or inappropriate
medication.
Item G-3-b-i: Responsibility
Instructions
Specify the entity (or entities) that have ongoing responsibility for monitoring participant
medication regimens, the methods for conducting monitoring, and the frequency of monitoring.
Technical Guidance
First-line responsibility for monitoring participant medication regimens resides with the medical
professionals who prescribe medications. The response to this item should identify the entity or
entities that conduct second-line monitoring.
This second-line monitoring may or may not be conducted by a state agency. Entities
responsible for second-line monitoring may include licensing agencies, case or care managers, or
others. Monitoring also might include the review of medication regimens by Medicaid agency
utilization review staff or contractors. Pursuant to 42 CFR § 441.302(a), when behaviormodifying medications are employed, second line monitoring responsibility must be specified. It
is not expected that in-depth monitoring will be conducted in the case of medications that are
prescribed for the short-term treatment of an illness.
Pursuant to 42 CFR § 441.302(a), the response must describe how second-line monitoring is
conducted, by whom and how frequently (e.g., periodic review of medication regimens by a care
manager or nurse). Monitoring methods should be designed to detect potentially harmful
practices and provide for follow-up to address such practices. Specify whether monitoring has
been designed to focus on waiver participants who have especially complex medication regimens
or who are prescribed behavior-modifying medications as part of their treatment programs.
Monitoring may be conducted as part of the periodic monitoring of participant health and
welfare.
CMS Review Criteria
The waiver specifies:
• The entity or entities responsible for ongoing monitoring of participant medication
regimens.
• The scope of monitoring (i.e., whether monitoring is designed to focus on certain
types of medications or medication usage patterns).
• Methods for conducting monitoring.
• Frequency of monitoring.
• How monitoring has been designed to detect potentially harmful practices and followup to address such practices.
• How second-line monitoring is conducted on the use of behavior modifying
medications.
Item G-3-b-ii: State Oversight and Follow-up
Instructions
Describe how the state oversees or monitors second-line medication management processes to
ensure that participant medications are managed appropriately, including: (a) the identification of
potentially harmful practices (e.g., the concurrent use of contraindicated medications); (b) the
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method(s) for following up on potentially harmful practices; and (c) the state agency (or
agencies) responsible for follow-up.
Technical Guidance
Provide an overview of how the state oversees the performance of second-line medication
monitoring processes to ensure that potentially harmful practices are identified and addressed.
Specify the state agency (or agencies) responsible for this oversight and how frequently
oversight is performed. If the Medicaid agency or operating agency (if applicable) does not
directly conduct this oversight, describe how oversight results are regularly shared with the
agency that administers the waiver program.
If improvements in oversight are planned during the period that the waiver is in effect, such
improvements should be briefly identified here and described in more detail in Appendix H.
CMS Review Criteria
The waiver specifies:
• The state agency (or agencies) responsible for oversight.
• When oversight is not conducted by the Medicaid agency or the operating agency (if
applicable), the process to communicate information and findings from monitoring are
regularly communicated to the Medicaid agency and the operating agency (if
applicable).
• How state monitoring is performed and how frequently.
• How the state monitoring program gathers information concerning potentially harmful
practices and employs such information to improve quality.
Item G-3-c: Medication Administration by Waiver Providers
This item concerns the administration of medications by waiver providers to waiver participants
who are not able to self-administer their medications or the oversight by waiver providers of
participant self-administration of medications.
Item G-3-c.i: Provider Administration of Medications
Instructions
Select the “yes” response when waiver providers administer medications or oversee the selfadministration of medications by waiver participants. Complete the remainder of the item. If
waiver providers do not administer medications or oversee self-administration, select the second
response. Do not complete the remainder of the item.
Item G-3-c.ii: State Policy
Instructions
Summarize the state policies that apply to administration of medications by waiver providers or
waiver provider responsibilities when participants self-administer medications, including (if
applicable) policies concerning medication administration by non-medical personnel. State laws,
regulations, and policies that are referenced in the summary need to be available to CMS upon
request through the Medicaid agency or the operating agency (if applicable).

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Technical Guidance
When waiver providers administer medications to participants who are unable to self-administer,
states typically have adopted formal policies (in law and/or regulation) that govern this practice.
The response to this item should summarize the applicable policies, including whether
administration is restricted to licensed medical personnel or may be performed by non-medical
waiver provider personnel. In the case of the latter, the summary should identify the
training/education that such personnel must have in order to administer medications and the
extent of oversight by licensed medical professionals that is performed. The summary also
should describe the state’s policies with respect to waiver providers overseeing the selfadministration of medications by waiver participants.
CMS Review Criteria
The waiver specifies:
•
•

Policies concerning the administration of medications to individuals who are unable to
self-administer and the responsibilities of providers for overseeing self-administration.
If applicable, the training/education that non-medical waiver providers must have in
order to administer medications to participants who cannot self-administer and the
extent of the oversight of these personnel by licensed medical professionals.

Item G-3-c.iii: Medication Error Reporting
Instructions
Select whether providers who administer medications to waiver participants who are unable to
self-administer must both record and report medication errors to a state agency. If this choice is
selected, specify the state agency to which errors are reported and the types of medication errors
that providers must: (a) record and (b) report. If providers are required to record errors but not
report them to a state agency, select the second choice and specify the types of errors that
providers must record. If providers are not required to record and/or report errors or waiver
providers do not administer medications but only oversee their self-administration by waiver
participants, select the “not applicable” choice.
Technical Guidance
Medication error recording and reporting are important medication administration quality
assurance/improvement tools. In some states, providers are required to record medication errors
and report some or all errors to a state agency. In other states, providers are required to record
but not report errors (in this instance, recorded errors may be reviewed during a periodic provider
quality review). Medication errors include such errors as wrong dose, wrong time, wrong route,
wrong medication or missed medication.
CMS Review Criteria
If applicable, the waiver specifies:
•
•

The types of medication errors that providers must record and/or report.
When reporting is required, the agency to which errors must be reported is specified.

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Item G-3-c.iv: State Oversight Responsibility
Instructions
Specify the state agency (or agencies) responsible for monitoring the performance of waiver
providers in the administration of medications to waiver participants who are unable to selfadminister, how monitoring is performed and its frequency.
Technical Guidance
Here, describes how the performance of waiver providers in administering medications is
monitored. If monitoring is not performed by the Medicaid agency or the operating agency (if
applicable), describe how monitoring results are regularly communicated to the agency that is
responsible for administering the waiver.
Monitoring may take the form of reviewing provider records or analyzing provider-reported
errors. The response should indicate how frequently monitoring of medication administration is
conducted. A state also may have linked the reporting of specific types of medication errors to
its critical incident management system. Describe how this monitoring is designed to identify
problems in provider medication administration, support remediation as appropriate and
contribute to quality improvement efforts in this arena.
The response should describe how information about medication monitoring is compiled and
explain how the collection of these data supports the identification of trends/patterns and the
development of quality improvement strategies.
CMS Review Criteria
The waiver specifies:
• The state agency (or agencies) responsible for the on-going monitoring of waiver
provider agencies’ performance in administering participant medications.
• When oversight is not conducted by the Medicaid agency or the operating agency (if
applicable), the process to communicate information and findings to the Medicaid
agency or the operating agency.
• Monitoring methods include the identification of problems in provider performance
and support follow-up remediation actions and quality improvement activities.
• How data are acquired to identify trends and patterns and support improvement
strategies.
Quality Improvement: Health and Welfare
The state demonstrates it has designed and implemented an effective system for assuring
waiver participant health and welfare.
The state demonstrates on an ongoing basis that it identifies, addresses and seeks to
prevent instances of abuse, neglect, exploitation and unexplained death.
The state demonstrates that an incident management system is in place that
effectively resolves those incidents and prevents further similar incidents to the
extent possible.
State policies and procedures for the use or prohibition of restrictive interventions
(including restraints and seclusion) are followed.

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The state establishes overall health care standards and monitors those standards
based on the responsibility of the service provider as stated in the approved waiver.
Instructions
The QIS describes how the state Medicaid Agency will determine that each waiver
assurance (and its associated component elements) is met. The waiver assurance is listed
above. For each assurance, CMS expects the description will include:
•

Activities or processes that are related to discovery and remediation, i.e., review,
assessment or monitoring processes; who conducts the discovery or remediation activities
and with what frequency, and the state’s method for analyzing information from
individual problems, identifying systemic deficiencies, and implementing remediation
actions. These monitoring activities provide the foundation for quality improvement by
generating information regarding compliance, potential problems and individual
corrective actions. The information can be aggregated and analyzed to measure the
overall system performance in meeting the waiver assurances. The types of information
used to measure performance, should include relevant quality measures/indicators.
The entity or entities responsible for reviewing the results (data and information) of
discovery and remediation activities to determine whether the performance of the system
reflects compliance with the assurances; and
The frequency at which system performance is measured.

•
•

How the Medicaid agency assures compliance with the following health and welfare
assurance:
o The state, on an on-going basis, identifies, addresses, and seeks to prevent the
occurrence of abuse, neglect and exploitation.
How frequently oversight is conducted; and
The entity (or entities) responsible for the discovery and remediation activities.

Appendix H: Systems Improvement
Quality Improvement Strategy
The initial QIS is submitted as part of the waiver application. When the waiver is renewed, an
updated QIS is submitted as part of the waiver application. Modifications or updates to the QIS
are submitted to CMS as part of the state’s Annual Report on Home and Community-Based
Services Waivers (HCFA 372(S) form), required under the provisions of 42 CFR § 441.302(h).

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The state has been asked to provide components of a quality improvement strategy (QIS) in the
appendices of the application as follows:
•
•
•
•
•
•
•

The measures and processes the state will use to determine that each waiver assurance is
met during the period that the waiver is in effect (discovery);
The measures and processes employed to correct identified problems (remediation);
The roles and responsibilities of the parties involved in measuring performance and
making improvements;
The processes employed to aggregate and analyze trends in the identification and
remediation of problems;
The processes employed to establish priorities, develop strategies for, and assess
implementation of system improvements (system improvement);
The process and timelines for compiling the information and communicating to waiver
participants, families, service providers, other interested parties, and the public; and
The frequency and processes used to evaluate and revise the QIS.

Additionally, Appendix H asks the state to describe:
•
•
•

How information about performance is used to identify and prioritize areas for system
improvement;
How quality improvement information is compiled and communicated; and
The process that the state will follow to assess the effectiveness of both the system
improvement and the QIS and revise it as necessary and appropriate.

General Instructions
Planned Quality Improvements. A state may not have a fully developed QIS when the waiver
application is submitted. For example, a state may not have a system to compile information
about the occurrence of and response to critical incidents but may plan to design and implement
such a system during the period the waiver is in effect. Or a state may plan to create a quality
improvement council to identify and prioritize quality improvement activities but does not expect
the council to be established prior to the effective date of the waiver renewal. When elements of
the QIS are not in place in a submitted application but will be developed and implemented during
the period the waiver is in effect, the QIS should include a detailed work plan with specific steps
and timelines for addressing the gap(s). The work plan should describe at minimum the specific
tasks to be undertaken, major milestones associated with completing each task, estimated
timeline for completion, and the entity (or entities) responsible for completing the tasks.
Multiple Waivers. It may be more efficient and effective for a QIS to span multiple HCBS
waivers and other related long-term care services, especially when a state operates more than one
waiver that serves the same or similar waiver target groups or multiple waivers employ similar
quality improvement methods. While the QIS may span multiple waivers and/or other Medicaid
long-term services, it must be designed to ensure it encompasses all requirements and assurances
specific to each waiver. Unless the state has requested and received approval from CMS for the
consolidation of multiple waivers for the purpose of reporting, then the state must stratify
information for each approved waiver program, i.e., employ a representative sample for each
waiver. Also include: (a) the control numbers for the other waivers and (b) the other Medicaid
long-term services to which the QIS applies.

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Concurrent Managed Care/Section 1915(c) Waivers. When a section 1915(c) waiver operates
concurrently with a Medicaid managed care authority, the quality-related requirements under
each authority must be met in their own right. The managed care quality requirements do not
supplant the section 1915(c) requirements and vice versa. In general, the Section 1915(c) waiver
assurances are not addressed in the managed care authority application and, hence, must be
addressed in the QIS. However, if there is information in the managed care authority application
that is pertinent to addressing a waiver assurance, include a reference to that section/item that is
in the managed care authority application.
CMS Review Criteria
When the state does not have a fully developed quality improvement strategy (QIS), there is a
work plan that addresses each element where improvements will take place during the waiver
period including the following:
• Specific tasks associated with the improvement.
• Major milestones and dates for completing the improvements.
• The entity (or entities) responsible for completing these tasks.
When the QIS spans more than one waiver and/or other types of long-term care services
under the Medicaid state Plan, the QIS:
• Stratifies information for each respective waiver.
• Provides control numbers of the other waivers.
• Provides the other long-term care services addressed in the QIS.
Quality Improvement Strategy: Systems Improvement
The initial QIS is submitted as part of the waiver application. When the waiver is renewed, an
updated QIS is submitted as part of the waiver application. Modifications or updates to the QIS
are submitted to CMS as part of the State’s Annual Report on Home and Community-Based
Services Waivers (CMS 372(S) form), required under the provisions of 42 CFR § 441.302(h).
In its application the state has been asked to provide components of a quality improvement
strategy (QIS) in the appendices of the application as follows:
•
•
•
•

Appendix H specifically asks the state to identify:
•
•
•
•

The processes employed to establish priorities, develop strategies for, and assess
implementation of system improvements (system improvement);
The process and timelines for compiling the information and communicating to waiver
participants, families, service providers, other interested parties, and the public;
The frequency and processes used to evaluate and revise the QIS;
How and by whom information about performance is used to identify and prioritize areas
for system improvement;
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•
•
•

How quality improvement information is compiled and communicated;
The process that the state will follow to assess the effectiveness of both the system
improvement and the QIS and revise it as necessary and appropriate; and
Information that the state gathers on participants’ experience of care, if any.

Detailed Instructions for Completing Appendix H
Instructions
The quality improvement strategy must describe roles and responsibilities of the parties
involved in discovery, remediation, and improvement activities. In other appendices, the state
has described the roles and responsibilities of parties involved in discovery and remediation. In
Appendix H, the description should include the roles and responsibilities of the Medicaid
agency, operating agency and non-state entities (as applicable), other state agencies, participants,
families and advocates, providers, and other contractors (if appropriate) in effectuating the
processes in the quality improvement strategy such as collecting and analyzing individual and
system-level information, determining whether the waiver requirements and assurances are met,
implementing remediation, and planning system improvement activities.
The focus of Appendix H is on identifying who is involved in appraising the state’s performance
in meeting the waiver assurances based on the results of discovery processes. The parties
involved in performance appraisal may vary by assurance, depending on the nature of the
assurance. The state may organize the involvement of individuals and entities in any number of
ways including, but not limited to, establishing a quality improvement unit, forming quality
improvement councils, and establishing standing committees. It is not necessary that the
Medicaid agency directly conduct every aspect of the quality improvement strategy. However,
since the QIS revolves around meeting the waiver assurances, it is necessary that the Medicaid
agency be the source of the delegation of activities in the QIS, and the recipient of the
monitoring, remediation and system improvement reports that pertain to meeting the assurances.
The Medicaid agency must also perform its own monitoring of all delegated activities.
CMS Review Criteria
The QIS describes the roles and responsibilities of entities and persons involved in collecting
and analyzing information derived from discovery and remediation activities (described in
other appendices), recommending system improvements, and analyzing the effectiveness of the
improvement initiatives.
QIS Processes to Establish Priorities, Develop, and Assess System Improvements
Instructions
The QIS must describe the processes employed to review findings from its discovery and
remediation activities, to establish priorities for system improvement, and to evaluate the
effectiveness of the improvements.
Technical Guidance
The purpose of state performance appraisal is to identify areas that warrant improvement. While
remediation often addresses correction of individual situations, system improvements result from
the analysis of the discovery and remediation activities. Often, the appraisals identify many
potential opportunities for system improvement. CMS recognizes that it may be necessary to
prioritize the design and implementation of system improvement strategies.
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Appendix H asks for a description of how the state will identify, prioritize and develop strategies
for system improvements. This is likely to involve multiple approaches, including the use of
researchers, special advisory consultants, research organizations, and consumer and/or provider
focus groups. The focus here is on describing the process the state will follow during the waiver
period, to identify the improvement initiatives it will pursue. The results of these initiatives will
be reported in the CMS annual report.
CMS Review Criteria
The QIS describes the processes that are employed to review findings, establish priorities,
develop strategies, and assess effectiveness of system improvements.
Compilation and Communication of Quality Improvement Information
Instructions
In Appendix H, the quality improvement strategy must describe how the state compiles quality
improvement information and the frequency with which the state communicates this information
(in report or other forms) to waiver participants, families, waiver services providers, other
interested parties and the public.
Technical Guidance
List and briefly summarize the major types of quality improvement information that will be
prepared during the period the waiver is in effect. Indicate for each source of information, the
topic addressed, the frequency with which it is developed and communicated, and the primary
audience (i.e., the groups for which the report(s) are prepared). Quality improvement
information may be designed to focus on specific areas of concern; may be related to a specific
location, type of service or subgroup of participants; may be designed as administrative
management reports; and/or may be developed to inform stakeholders and the public. Describe
how quality improvement results are communicated to other agencies, participants, families,
waiver providers, other interested parties, and the public. Results may be posted to a website.
Not all sources of information need be disseminated to each stakeholder group.
Reports may be targeted to specific entities for the purpose of ongoing quality improvement such
as routine incident management summary reports issued to providers for response and action or
reports issued to Medicaid agency by the operating agency on compliance with assurance
requirements.
CMS Review Criteria
The QIS describes:
• The types of quality improvement reports that are compiled.
• The frequency with which such reports are compiled.
• How results are communicated, and with what frequency, to agencies, waiver providers,
participants, families and other interested parties, and the public.
Periodic Evaluation and Revision of the QIS
Instructions
Describe the process to periodically evaluate and revise, as appropriate, the quality improvement
strategy.
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Technical Guidance
Quality improvement strategies are dynamic. They can and do change over time in response to
changing needs and conditions in the waiver program/state. Because of this dynamic nature, it is
important for states to periodically evaluate their QI strategies. The results of the evaluation
might demonstrate the need to change priorities, use different approaches to measure progress,
modify roles and responsibilities of key entities, and modify data sources in order to retrieve the
information needed for measurement.
In this section, briefly describe the process that will be used to periodically evaluate the QIS and
the frequency with which the evaluation/re-evaluation will occur. The description should also
identify the key entities involved in the evaluation. It is up to the state to determine the
frequency for evaluating the QIS. However, the QIS should be evaluated at least once during the
waiver period and evaluated in advance of the submission of the waiver renewal application.
If the result of the evaluation process is revision of the QIS, the revised QIS should be
communicated to CMS as part of the submission of the annual waiver report.
CMS Review Criteria
The QIS describes the process and frequency for evaluating and updating the QIS (i.e., once
during the waiver period and prior to renewal).

Appendix I: Financial Accountability
Brief Overview
This Appendix addresses the following financial elements of HCBS waiver operations:
•
•
•
•
•
•
•

Financial Integrity and Accountability (Appendix I-1)
Rates, Billings and Claims (Appendix I-2)
Payments (Appendix I-3)
Non-Federal Matching Funds (Appendix I-4)
Exclusion of Medicaid Payment for Room and Board (Appendix I-5)
Payment for Rent and Food Expenses of an Unrelated Live-In Caregiver (Appendix I-6)
Participant Co-Payments for Waiver Services and Other Cost Sharing (Appendix I-7)

NOTE: When an HCBS waiver operates concurrently with a Medicaid managed care authority
and waiver services are furnished through managed care entities (e.g., MCOs, PIHPs or
PAHPs), the responses to several items in Appendices I-1, I-2 and I-3 are affected. The
instructions contain guidance about how responses to the certain items are affected when there
is a concurrent waiver.

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Appendix I-1: Financial Integrity and Accountability
Detailed Instructions for Completing Appendix I-1
Instructions
In the text field, describe the methods that are employed to ensure the integrity of payments that
have been made for waiver services, including: (a) requirements concerning the independent
audit of provider agencies; (b) the post-payment review program that the state conducts to ensure
the integrity of provider billings for Medicaid payment of waiver services, including the
methods, scope and frequency of reviews that are conducted; and, (c) the agency (or agencies)
responsible for conducting the periodic independent audit of the waiver program as required by
the Single Audit Act.
Technical Guidance
This item focuses on how the state assures the integrity of payments made for waiver services. It
concentrates on post-payment review activities rather than on the methods of ensuring the
validity of provider billings prior to payment (those methods are addressed in Item 2-d below).
Pursuant to section 1902(a)(30)(A) of the Act and the related federal regulations at 42 CFR §§
447.200-205, the description must address each of the following:
•
•

State requirements concerning the independent audit of provider agencies. Specify
whether waiver providers are required to secure an independent audit of their financial
statements.
The state’s own post-payment review program to ensure the integrity of provider
billings for Medicaid payment of waiver services. Describe the post-payment review
activities that are used for each waiver service. The same review activities may be used
for several waiver services. When this is the case, the description may group the services
to which the same methods apply. In instances in which post-payment review activities
differ by service type, states must clearly describe the differences pursuant to section
1902(a)(30)(A) of the Act and the related federal regulations at 42 CFR §§ 447.200-205.
If the state documents fiscal integrity measures for self-directed services elsewhere in the
application, it is not necessary to repeat that information if a reference to the appropriate
appendix is provided. For each post-payment activity, the waiver application should
address:
•

Methods for reviewing paid claims. A post-payment review program might
include testing a sample of provider billings to ensure that they are properly
supported by documentation of the actual provision of waiver services or the
review of provider cost accounting systems to ensure that, when rates are based
on provider costs, costs have been properly recorded and do not include
unallowable expenses.

•

Methods for addressing findings. Describe how the results of reviews are
communicated to providers. If the state requires corrective action plans from
providers, specify how the state ensures corrective action plans are followed.
When post-payment reviews identify retractable claims, the state must remove the
claim from its FFP calculation and recoup the inappropriate payment.

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•

Scope of the review. Describe how claims or records are selected for review. For
example, the scope of a post-payment review might be the last six months of
claims for a representative sample of providers, or a representative sample of
claims for providers identified through a risk analysis.

•

Frequency of the review. Define how often post-payment activities are
conducted. If the state does not perform post-payment activities at specific
intervals, explain specific reasons and thresholds that would initiate a postpayment review.

The state agency (or agencies) responsible for conducting the state’s post-payment review
activities. If post-payment reviews are conducted by contractors, specify the state agency
responsible for overseeing contractor performance. If multiple agencies and/or
contractors are performing post-payment reviews, then describe each agencies’ method,
scope, and frequency of the post-payment reviews and ways to prevent any duplicative,
unnecessary efforts during the review process.
The state agency (or agencies) responsible for conducting the state’s independent
financial audit in accordance with the Single Audit Act. HCBS waivers (like other
Medicaid services) also are subject to requirements of the Single Audit Act (31 U.S.C.
7501-7507) as amended by the Single Audit Act Amendments of 1996 (P.L. 104-146). If
the financial audit program is conducted by contractors, specify the state agency
responsible for overseeing contractor performance.

If the description cites applicable state laws, regulations, and policies, the documents cited must
be readily available through the Medicaid agency or the operating agency (if applicable) when
requested by CMS.
Section 1915(c) Waivers that Operate with Concurrent Medicaid Managed Care. When the
HCBS waiver operates concurrently with a Medicaid managed care authority, such as a section
1915(b) waiver, and waiver services are furnished through managed care entities (e.g., MCOs,
PIHPs or PAHPs), the managed care authority financial accountability requirements apply.
Under such arrangements, the state does not make payments directly to waiver providers but
instead pays a capitated payment rate to the managed care entity for the delivery of waiver
services and the entity in turn pays other providers (except, if applicable, services that are
furnished on a fee-for-service basis outside the capitated rate). Alternative methods are used to
ensure financial accountability, including ensuring that payments are only made to a managed
care entity only for eligible persons who have been properly enrolled in the waiver. Therefore,
the description of the methods to ensure payment integrity should only briefly address the
methods to ensure the integrity of payments to managed care entities unless payments are also
made on a fee-for-service basis for some waiver services outside the capitation rate. The
summary may include references to the managed care authority application or provisions of the
state’s contract with managed care entities.

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CMS Review Criteria
The waiver:
• Specifies whether providers are required to secure an independent audit of their
financial statements.
• Describes the state’s post-payment review program, including the methods, frequency,
and scope of reviews.
• Provides for a post-payment review program that is adequate to assure the integrity of
payments.
• Specifies responsibilities for conducting post-payment review activities.
• Identifies the entity responsible for conducting the periodic independent audit of the
waiver program under the provisions of the Single Audit Act.
In the case of section 1915(c) waivers that operate with a concurrent Medicaid managed
care authority, the foregoing criteria apply only to services not included in the capitation
rate. Managed care requirements and criteria apply to ensuring financial accountability of
payments made to managed care entities and this information is included under the
appropriate managed care authority.
Quality Improvement: Financial Accountability
The state must demonstrate that it has designed and implemented an adequate system for
insuring financial accountability of the waiver program.
The state provides evidence that claims are coded and paid for in accordance with
the reimbursement methodology specified in the approved waiver and only for
services rendered.
The state provides evidence that rates remain consistent with the approved rate
methodology throughout the five-year waiver cycle.
Instructions
The QIS must describe how the state Medicaid agency will determine that each waiver
assurance (and its associated component elements) is met. The waiver assurance and
component elements are listed above. For each component element, this description must
include:
•

Activities or processes that are related to discovery and remediation, i.e., review,
assessment or monitoring processes; who conducts the discovery or remediation activities
and with what frequency, and the state’s method for analyzing information from
individual problems, identifying systemic deficiencies, and implementing remediation
actions. These monitoring activities provide the foundation for quality improvement by
generating information regarding compliance, potential problems and individual
corrective actions. The information can be aggregated and analyzed to measure the
overall system performance in meeting the waiver assurances. The types of information
used to measure performance, should include relevant quality measures/indicators.

•

The frequency at which system performance is measured.
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•
•

How the Medicaid agency assures compliance with the following assurance:
o State financial oversight exists to assure that claims are coded and paid for in
accordance with the reimbursement methodology specified in the approved
waiver.
How frequently oversight is conducted; and
The entity (or entities) responsible for the discovery and remediation activities.

Appendix I-2: Rates, Billing and Claims
Overview
This Appendix addresses the following topics: (a) waiver service rate determination methods; (b)
the flow of provider billings (a.k.a., provider claims for payment for services furnished to waiver
participants) to the state; (c) the practice of certifying public expenditures; (d) processes for
validating provider payments; and (e) billing maintenance requirements.
Detailed Instructions for Completing Appendix I-2
Item I-2-a: Rate Determination Methods
Instructions
In the text field and in two pages or less (no more than 12,000 characters), describe the methods
that are employed to establish provider payment rates for waiver services and the entity or
entities that are responsible for rate determination. Indicate any opportunity for public comment
in the process for establishing rates. Describe the state’s rate review process to ensure that
payment rates remain in compliance with section 1902(a)(30)(A) of the Act (i.e., “payments are
consistent with efficiency, economy, and quality of care and are sufficient to enlist enough
providers”). If different methods are employed for various types of services, the description may
group services where the same method is employed. If the state discusses rate-setting
information specific to participant directed services in other appendices of the application,
provide a reference to this information, or describe the rate setting methodology in detail in this
section.
Technical Guidance
Waiver payment rates may be determined in a variety of ways and frequently the methods that
are employed vary by type of service. While rate determination methods may vary, payments for
waiver services (like other Medicaid services) must be consistent with the provisions of section
1902(a)(30)(A) of the Act and the related federal regulations at 42 CFR §§ 447.200-205. The
state should have a monitoring process to ensure that these requirements are met. States must
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review their rate setting methodology, at minimum, every five years to ensure that rates are
adequate to maintain an ample provider base and to ensure quality of services. This rate review
process can encompass a variety of rate review methods. For example, a state could elect to
rebase their existing rate setting methodology. Rate rebasing would involve evaluating an
existing fee schedule rate setting methodology and adjusting or updating individual rate
components with more current data. States must describe their rate review process. The state’s
description of the rate review process should include:
•
•
•
•

When rates were initially set and last reviewed;
How the state measures rate sufficiency and compliance with section 1902(a)(30)(A) of
the Act;
The rate review method(s) used; and
The frequency of rate review activities.

Rates may be prospective or provide for retrospective cost settlement of interim rates. Rates may
be established by maintaining a state established fee-for-service schedule. If the state uses a feefor-service schedule, the rate model (i.e., underlying cost factors and assumptions) must be
readily available through the Medicaid agency or operating agency (if applicable) when
requested by CMS. The state may submit this information to CMS under “Additional Needed
Information (Optional)” under the Main Module Section of the application if there is not a space
available in the Appendix I-2-a. CMS may request the rate model from the state during the
informal or formal RAI process. Rates may incorporate “difficulty of care” factors to take into
account the level of provider effort associated with serving individuals who have differing
support needs; rates may also include geographic adjustment factors to reflect differences in the
costs of furnishing services in different parts of a state. If state-established rates vary for
different providers of a waiver service, indicate the basis for the variation. The same rate
determination method may be used for several waiver services. When this is the case, the
description may group the services to which the same method applies. When a service is
available for participant direction, the state must expressly state whether the rate determination
method differs from the methodology used when the service is provider-managed. If the rate
determination method differs, the state must document how it differs. State laws, regulations or
policies cited in this description must be readily available through the state Medicaid agency or
the operating agency (if applicable) when requested by CMS.
Participant Direction. When a service may be participant directed, describe whether the method
of rate determination in any way differs from the methodology that is utilized when service is
provider managed.
Pursuant to section 1902(a)(30)(A) of the Act and the related federal regulations at 42 CFR §§
447.200-205, a state must have uniform rate determination methods or standards that apply to
each waiver service. Rates may be established by the operating agency so long as they are in
accordance with methods or standards that have been adopted or approved by the Medicaid
agency. The same methods or standards must be applied in all jurisdictions where waiver
services are furnished. When local government agencies establish provider payment rates, the
rates must be determined employing the uniform methods or standards that have been adopted by
the state in order to ensure that payments across all areas of the state are equivalent (differences
in rates are based on factors specified in the methodology or formula – e.g., difficulty of care or
geographic adjustment factors). The description of rate determination methods must clearly
identify the entity (or entities) that perform the rate determination function and the oversight
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process that is employed to assure the integrity of the rate setting activity (i.e., the methodology
is adhered to and any differences in rates for a waiver service are consistent with the
methodology). Also, describe the extent to which public comment is solicited concerning rate
determination methods.
Also, describe how the state makes information available about payment rates available to
waiver participants so that they are aware of the costs of waiver services.
Section 1915(c) Waivers that Operate with Concurrent Managed Care. When the HCBS
waiver operates concurrently with a managed care authority (sections 1915(b),1932(a),1115) and
waiver services are furnished through managed care entities (e.g., MCOs, PIHPs or PAHPs), the
state establishes a capitation (per member per month) payment rate that it makes the managed
care entity. The managed care entity then establishes the payments it makes to waiver providers
who furnish services to waiver participants. For these managed long-term services and supports
(MLTSS) programs, or for programs that include MLTSS as part of an integrated care delivery
system, the managed care capitation rates are actuarially certified and approved by the CMS
Division of Managed Care Policy, Division of Managed Care Operations, and Office of the
Actuary. When such arrangements are in effect, only describe the rate setting methods that are
employed for the waiver services that are not included in the capitation rate (i.e., services that
will continue to be furnished on a fee-for-service basis). Do not describe how the capitation rate
is established. Instead, simply make reference to the concurrent managed care authority
application and associated materials.
Administrative Claiming
Some services such as case management, supports broker, and FMS may be provided as a
Medicaid administrative activity rather than as a waiver service. The state needs to ensure that
the administrative costs, necessary for the efficient administration of the Medicaid state plan, are
in accordance with the approved cost allocation plan. Please note that cost allocation plans are
not approved via approval of the HCBS waiver application.

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CMS Review Criteria
The waiver:
•

Describes the rate setting method that it used for each waiver service. If rates are not
uniform for every provider of a waiver service, the waiver describes the basis for the
variation.
• Describes the rate setting methodology for self-directed services, if applicable.
• Specifies the entity (or entities) responsible for rate determination and how oversight
of the rate determination process is conducted.
• Specifies the year rates were set and the year in which rates were last reviewed.
• Describes how the Medicaid agency solicits public comments on rate determination
methods.
• Describes how information about payment rates is made available to waiver
participants.
• Describes the state’s rate review methods and processes.
In the case of waivers with approved concurrent managed care authority (e.g., 1915(b),
1932(a), 1115), the foregoing criteria apply only to services not included in the capitation
rate. The method of determining the capitation rate is subject to managed care requirements
and criteria.
Item I-2-b: Flow of Billings
Instructions
Describe the flow of billings for waiver services, specifying whether provider billings flow
directly from providers to the state’s claims payment system or whether billings are routed
through other intermediary entities. If billings flow through other intermediary entities, specify
the entities.
Technical Guidance
Indicate whether billings for waiver services flow directly from service providers to the state’s
Medicaid claims processing system (MMIS) or pass through intermediate entities (e.g., an
Organized Health Care Delivery System, a FMS entity, a local government agency (e.g., county),
a state agency or via another route). If the flow of billings differs among types or classes of
waiver services, describe each flow of billings. The description should provide a clear picture of
how a provider invoice becomes a claim for Medicaid payment.
There is no federal requirement that all waiver provider billings must flow directly from the
waiver provider to the state. Alternative arrangements may be made to flow billings through
intermediate entities (e.g., public or private local management entities or a limited fiscal agent).
The various types of alternative arrangements that may be employed are subject to other federal
requirements. Pursuant to section 1902(a)(32) of the Act, a state must provide that a provider
may bill Medicaid directly rather than require that all billings flow through an intermediate entity
such as an OHCDS, a county or local government, etc.
Section 1915(c) Waivers that Operate with Concurrent Managed Care. When the HCBS
waiver operates concurrently with a managed care authority and waiver services are furnished
through managed care entities (e.g., MCOs, PIHPs or PAHPs), provider billings flow to the
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managed care entity except for services that are furnished on a fee-for-service basis outside the
capitation (per member per month) payment to the managed care entity. Only describe the flow
of billings for services that are furnished on a fee-for-service basis. Indicate that managed care
entity billings to the state are made in accordance with the provisions of the managed care
authority and provider billings to the managed care entity are made in the terms of the provider’s
contract with the managed care entity.
CMS Review Criteria
The waiver:
• Describes the flow of billings from the waiver service provider to the state so that it is
clear how a provider invoice becomes a claim to Medicaid.
• Provides for the direct provider billing of waiver services to the state, or the option of
direct provider billing of waiver services to the state.
In the case of section 1915(c) waivers that operate with a concurrent Medicaid managed care
authority, the foregoing criteria apply only to services not included in the capitation rate.
Otherwise, flow of billings is subject to managed care requirements and criteria.
Item I-2-c: Certifying Public Expenditures
Instructions
Select whether Certified Public Expenditures (CPEs) are made for waiver services and, if so,
whether the CPEs are made by state and/or local government agencies, specifying: (a) the local
government agencies that make the CPEs; (b) how it is assured that the CPE is based on the total
computable costs for waiver services; and, (c) how the state verifies that the CPEs are eligible for
federal financial participation in accordance with 42 CFR § 433.51(b).
Technical Guidance
In some instances, a state or local government agency directly incurs the costs of furnishing
waiver services and submits its costs (termed “certified public expenditures” or CPEs) to the
Medicaid agency in lieu of providers billing the services directly to the Medicaid agency. For
example, a state agency or county that contributes part or all of the cost of service may directly
pay provider billings for waiver services on behalf of the Medicaid agency and then submit the
total amount it paid for waiver services to the Medicaid agency via a CPE. The CPE serves as
the basis for the Medicaid agency’s claim to CMS for federal financial participation (FFP). The
Medicaid agency would submit the CPE to CMS and FFP would be available as a percentage of
the total cost incurred/payments made by the state or local government agency. The Medicaid
agency payment to the state or local government agency would be the federal share of waiver
costs. [N.B., CPEs also are addressed in Appendix I-4 where the sources of funds that underlie
the CPEs must be detailed.]
When CPEs are made as part of the state’s claim for FFP, the state must have a process to assure
that the CPE is based on total computable costs for waiver services. This means the CPE
represents the total costs incurred/payments made by the state or local government agency and
that FFP is available as a percentage of these total costs incurred/payments made. In addition,
the CPE is net of any third party recoveries for the cost of services and/or waiver participant
financial liability computed under post-eligibility treatment of income requirements). This
process must be described in the response to this item. Finally, the state must have a process to

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verify that the CPEs are eligible for FFP in accordance with 42 CFR § 433.51(b). This process
also must be described in the response to this item.
CMS Review Criteria
When CPEs are made, the waiver specifies:
• The state and/or local government agencies that certify the expenditures.
• The processes used to ensure that CPEs are based on total computable waiver costs.
• The processes to verify that the CPEs are eligible for federal financial participation.
Item I-2-d: Billing Validation Process
Instructions
In the text field, describe the process or processes that are employed to validate provider billings
that are included in the state’s claim for federal financial participation.
Technical Guidance
“Billing validation” means pre-payment and other processes that are designed to ensure that the
provider’s billing for waiver services meets essential tests and that only valid billings are
included in the state’s claim for federal financial participation. The essential tests are: (a) the
individual was eligible for the Medicaid waiver payment on the date of service; (b) the service
billed was included in the participant’s approved service plan; and (c) the services were
provided. Billing validation is essential for ensuring the integrity of payments for Medicaid
services.
Billing validation may entail using the MMIS to validate claims (e.g., verifying that the
individual for whom the billing was made was eligible for Medicaid on the date of service)
and/or additional pre-payment audit activities conducted by other entities (e.g., verifying that the
service billed was included in the participant’s service plan). States have many pre-payment
billing validation options, including:
•
•
•
•
•

Predictive modeling;
Pre-payment reviews;
Visit verification systems;
Third party liability processes; and
Case management systems that interface eligibility, service plan and claims data.

Some billing validation processes may be conducted post-payment (e.g., surveillance and
utilization review), including verification that the service billed was actually rendered. When a
validation process that is conducted post-payment reveals a problem with a billing, the state is
expected to remove the problem billing from its claim for FFP and recoup the inappropriate
payment. For post-payment activities, the state may reference its response to Appendix I-1 of
the waiver application.
CMS Review Criteria
The billing validation methods address the three essential tests (below):
•
•
•

The individual was eligible for Medicaid waiver payment on the date of service;
The service was included in the participant’s approved service plan; and,
The services were provided.
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Item I-2-e: Billing and Claims Record Maintenance Requirement
Instructions
No response required.
Technical Guidance
Adequate records and information must be maintained to support financial accountability. In
accordance with 45 CFR § 75.361, records and additional documentation to support financial
accountability must be maintained, at a minimum, 3 years from the submission of each CMS372(S) report. These records must be sufficient to ensure that there is an audit trail documenting
payments made to providers for waiver services. The audit trail must begin at the point of
service to the participant (and, thereby, include sufficient documentation that the service was
actually rendered on the date shown on the provider billing) and continue through to the claim
for FFP.
Appendix I-3: Payment
Overview
This section concerns processes for the payment of provider billings (i.e., the transmittal of funds
from the state to the waiver provider who furnished the service). Item I-3-g also provides for the
identification of other payment arrangements (e.g., reassignment of payments to a governmental
agency) that are recognized under federal law.
Detailed Instructions for Completing Appendix I-3
Item I-3-a: Method of Payment -- MMIS
Instructions
Indicate whether payments to providers for waiver services are made exclusively through the
state’s Medicaid Management Information System (MMIS). If not, then select one of the other
choices. Also, select the first choice because, in accordance with section 1902(a)(32)(A) of the
Act, the Medicaid agency must always retain the capability to make direct payment to a provider
whether or not it has other methods for making payment.
Technical Guidance
Usually, direct state payments to providers of waiver services are made through the state’s
MMIS. Use of the MMIS to make payments permits employing MMIS sub-systems to validate
claims (e.g., ensuring that the individual for whom the payment is made was eligible on the date
of service). Use of the MMIS provides a direct linkage between provider payments and the
claim for FFP.
When payments to providers for some or all waiver services are made outside the MMIS, a
complete description of the process that is employed needs to be provided, clearly identifying the
entities that make payments and how the audit trail is maintained to ensure the integrity of
payments (i.e., the payment for each waiver service can be directly linked to the original
validated provider billing for the service). In the case of some waivers, an operating agency
receives provider billings, processes the billings, and makes payment to providers. When this is
the case, the arrangement should be further specified in Item I-3-b (limited fiscal agent) or Item
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I-3-g-i (reassignment to a governmental entity) as the case may be. Participant-directed services
can give rise to another instance when payments to providers are made outside the MMIS when a
FMS entity makes payments to participant-employed workers under an agreement with the
Medicaid agency.
Section 1915(c) Waivers that Operate with Concurrent Managed Care. In the case a section
1915(c) waiver that operates with a concurrent Medicaid managed care authority, payments to
providers are made by the managed care entity which receives a capitated payment from the
state. Describe how payments are made to managed care entities, including how such payments
are made through the MMIS.
CMS Review Criteria
When payments to providers are made outside the MMIS, the waiver specifies:
• The processes that are used to make payment.
• How the processes ensure the maintenance of a proper audit trail.
• Providers may receive payment directly from the Medicaid agency.
• When payments for waiver services are made by a managed care entity or entities, the
waiver describes how the monthly capitated payments are made to the managed care
entity or entities.
Item I-3-b: Direct Payment
Instructions
Check each applicable mechanism that is employed to make payments to waiver providers.
Technical Guidance
Section 1902(a)(32) of the Act requires payments to be made directly by the Medicaid agency to
the actual providers of waiver and state plan services. This requirement is satisfied when the
Medicaid agency itself makes the payment or the payment is made by the same state fiscal agent
that makes payments on behalf of the Medicaid agency for other Medicaid services. As a
general matter, the Medicaid agency must always retain the capability to make direct payment to
a provider and, thus, the first choice always should be selected.
In the alternative, payments may be made by a limited fiscal agent that is subject to Medicaid
agency oversight. If a limited fiscal agent is used, identify the agent, describe the functions that
the limited agent performs, and describe how the Medicaid agency exercises oversight of this
agent. A limited fiscal agent might be a waiver operating agency or a FMS entity. This selection
should be made when payments for some or all waiver services are made outside the MMIS, as
indicated in Item I-3-b.
Section 1915(c) Waivers that Operate with Concurrent Managed Care. In the case of a
section 1915(c) waiver that operates with a concurrent Medicaid managed care authority, only
describe how payments are made for services that are not included in the capitation rate that is
paid to the managed care entity. If no services are paid outside the capitation rate, simply
respond “not applicable.”

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CMS Review Criteria
•

The waiver specifies that the Medicaid agency makes payments directly to providers
of waiver services.

•

When a limited fiscal agent is employed, the waiver specifies:
o The entity or entities that serve as a limited fiscal agent.
o The payment functions performed by the limited fiscal agent.
o How providers are informed about the process for billing Medicaid directly.
o How the Medicaid agency exercises appropriate oversight of the limited fiscal
agent.

•

When providers are paid by a managed care entity or entities for services that are
included in the state’s contract with the entity, the waiver specifies how providers are
paid for the services (if any) not included in the state’s contract with managed care
entities.

Item I-3-c: Supplemental or Enhanced Payments
Instructions
Indicate whether supplement or enhanced payments are made to the providers of waiver services.
If they are, then provide the additional information specified.
Technical Guidance
A supplemental or enhanced payment is a payment for waiver services that is in addition to the
amount billed by the provider for a service. Section 1902(a)(30)(A) of the Act requires that
payments for Medicaid services be consistent with efficiency, economy, and quality of care.
Section 1903(a)(1) of the Act provides for FFP to states for expenditures for services under an
approved state plan/waiver.
If any additional payments are made, describe (a) the nature of the supplemental or enhanced
payments that are made and the waiver services for which these payments are made; (b) the types
of providers to which such payments are made; (c) the source of the non-federal share of the
supplemental or enhanced payments; and (d) whether providers eligible to receive the
supplemental or enhanced payment must be able to retain 100% of the total computable
expenditure claimed by the Medicaid agency to CMS. An example of a type of payment that
might be classified as a supplement or enhanced payment is the payment of a performance
incentive. For the purpose of this item, payments that are made to providers as adjustments to
interim payment rates or for reconciliation purposes are not considered supplemental or
enhanced payments. When supplemental or enhanced payments are made, the state is expected
to furnish CMS upon request detailed information about the total amount of supplemental or
enhanced payments to each provider type in the waiver.
Section 1915(c) Waivers that Operate with Concurrent Managed Care. In the case of a
section 1915(c) waiver that operates with a concurrent Medicaid managed care authority, the
managed care authority might provide for payments in addition to the monthly capitation rate
based on performance or other factors. If so, select the “yes” response and reference the
applicable provisions of the managed care authority.

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CMS Review Criteria
When supplement or enhanced payments are made:
•
•
•
•
•

The waiver specifies the nature of the payments that are made and the waiver services
for which these payments are made;
The types of waiver providers that receive such payments.
The waiver specifies the source of the non-federal share of the supplemental or
enhanced payments.
The waiver specifies that providers eligible to receive the supplemental or enhanced
payment must be able to retain 100% of the total computable expenditure claimed by
the Medicaid agency to CMS.
The basis of such payments is transparent (i.e., it is clear to the public which providers
would receive the additional payments and under what circumstances).

Item I-3-d: Payments to State or Local Government Providers
Instructions
Indicate whether payment is made to state or local government providers for the provision of
waiver services. If so, specify the state or local government providers that receive payment and
the waiver services that they furnish. Also, complete Item I-3-e.
Technical Guidance
State or local governmental entities may furnish waiver services, provided that they meet the
pertinent provider qualifications. A state may not limit the provision of any waiver service
solely to state or local government providers.
CMS Review Criteria
When state or local government providers furnish waiver services, the waiver specifies the
types of entities that furnish services and the services that they furnish.
Item I-3-e: Amount of Payment to State or Local Government Providers
Instructions
When payment is made to state or local government providers for the provision of waiver
services, indicate whether state or local government providers are paid the same amount as other
providers of the same service. If not, then indicate whether payments to state or local
government providers in the aggregate exceed their reasonable costs of providing waiver
services. Pursuant to section 1902(a)(30)(A) of the Act, states must describe in this section how
the state recoups the excess and returns the federal share of the excess to CMS using the
quarterly expenditure report.
Technical Guidance
Medicaid payments to state or local government providers are subject to an additional test when
the amount paid to a state or local government provider differs from the amount paid to other
providers of the same service. Specifically, the aggregate payments to state or local government
providers (including regular and supplemental or enhanced payments) that exceed their
reasonable costs of furnishing a service would be an area of significant interest during CMS’
review and would likely require additional information.
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Payments to state or local government providers may differ from payments to other providers
when the payment amount itself is based on the reasonable costs that state or local government
providers incur in furnishing the service. Select the second choice when payments are based on
a determination of reasonable costs.
Otherwise, the state should have in effect mechanisms to determine whether the aggregate
payments made to state or local government providers exceed their reasonable costs in furnishing
waiver services. When it is determined that aggregate payments exceed reasonable costs, the
state must recoup the excess payment and return the federal share of the excess payment to the
federal government within 60-days. Federal Medicaid funds may not be diverted to underwrite
the costs of state or local providers furnishing non-approved services or providing services to
ineligible individuals.
CMS Review Criteria
When the third choice is selected (when state or local government providers receive payments
that in the aggregate exceed the cost of waiver services), the waiver specifies:
• How the state recoups the excess and returns the federal share of the excess to CMS on
the quarterly expenditure report; and
• A satisfactory recoupment process.
Item I-3-f: Provider Retention of Payments
Instructions
Indicate whether providers receive and retain 100 percent of the total computable expenditure
claimed by the Medicaid agency to CMS for waiver services. In the case of a section 1915(c)
waiver that operates with a concurrent managed care authority, select the second choice and
indicate whether managed care entities receive and retain 100 percent of the amount that the state
claims for capitation payments to such entities.
Technical Guidance
Pursuant to section 1902(a)(30)(A) of the Act, the amount claimed to CMS for waiver services
must match the amount paid to waiver providers less the application of any third party (e.g.,
Medicare) recoveries and additional adjustment adjustments for co-pays or participant financial
liability as determined through the post-eligibility treatment of income process. In other words,
the computable costs of waiver services must match adjudicated provider billings less the
foregoing adjustments. A state may not claim an amount that exceeds the computable costs of
waiver services. Provider payments may not be claimed but then reduced in a manner that has
the effect of reducing the non-federal share of waiver services, including requiring that providers
return some portion of their payments to the state. Claims to CMS for FFP for waiver services
must represent actual expenditures of public funds.
Section 1915(c) Waivers that Operate with Concurrent Managed Care. In the case of a
section 1915(c) waiver that operates with a concurrent Medicaid managed care authority,
indicate in the text field whether the capitation payments that are made to managed care entities
are reduced or returned to the state in a fashion that results in a disparity between the amount that
is claimed to CMS and the amounts actually paid to managed care entities. If so, describe the
methodology for reduced or returned payments and specify the use of the funds retained or
returned to the state.
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CMS Review Criteria
Waiver providers must receive and retain 100 percent of the total computable expenditure
claimed by the Medicaid agency to CMS.
Item I-3-g: Additional Payment Arrangements
This item addresses additional payment arrangements that may be employed for waiver services.
Two of these arrangements (reassignment of payment to a governmental agency and Organized
Health Care Delivery System) are recognized exceptions to the requirement contained in section
1902(a)(32) of the Act that prohibits state payments for Medicaid services to any entity other
than the provider of the service.
Item I-3-g-i: Voluntary Reassignment of Payments to a Governmental Agency
Instructions
Indicate whether the state provides for the voluntary reassignment of payments for waiver
services and, if so, specify the governmental agency or agencies to which such reassignments
may be made.
Technical Guidance
Under the provisions of 42 CFR § 447.10(e), a provider may reassign the payment for waiver
services to a governmental agency. This provision is a recognized exception to the requirement
contained in section 1902(a)(32) of the Act that prohibits state payments for Medicaid services to
any entity other than the provider of a service. Reassignment is typically employed when a
governmental agency pays a provider for a service and reassignment is used to permit the
governmental agency to recover its outlay. Reassignment arrangements must be voluntary on the
part of the provider and the state must provide for the payment to providers who elect not to
reassign payment. Reassignment is described further in the December 20, 1993 State Medicaid
Director letter included in Attachment C.
Item I-3-g-ii: Organized Health Care Delivery System
Instructions
Indicate whether the waiver employs OHCDS arrangements. If so, in the text field provide the
additional information specified in the item.
Technical Guidance
Waiver services may be provided by an Organized Health Care Delivery System (OHCDS), as
defined in 42 CFR § 447.10. An OHCDS must provide at least one Medicaid service directly
(utilizing its own employees) and may contract with other qualified providers to furnish other
waiver services. When an OHCDS arrangement is used, the required Medicaid provider
agreement is executed between the state and the OHCDS. Since the OHCDS acts as the
Medicaid provider, it is not necessary for each subcontractor of an OHCDS to sign a provider
agreement with the Medicaid agency. However, subcontractors must meet the standards under
the waiver to provide waiver services for the OHCDS. The use of an OHCDS arrangement does
not alter fundamental waiver requirements with respect to provider qualifications or service
standards.

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When an OHCDS arrangement is used to provide waiver services, payment is made directly to
the OHCDS and the OHCDS reimburses its subcontractors. Waiver providers may not be
required to affiliate with an OHCDS. Such an arrangement must be voluntary and the state must
provide for entering into a provider agreement with providers that elect not to affiliate with an
OHCDS. Moreover, waiver participants may not be required to secure services exclusively
through an OHCDS. Additional information concerning OHCDS arrangements is contained in
the December 20, 1993 State Medicaid Director letter located in Attachment C.
When a waiver provides for participant direction of services and FMS are furnished as a waiver
service (rather than as an administrative activity), entities that furnish FMS may be designated as
an OHCDS (by virtue of the fact that their employees furnish a waiver service). Designation of
FMS providers as OHCDS entities may facilitate contracting for and purchase of participantdirected services.
When OHCDS arrangements are employed, the waiver needs to specify:
•

The entities that are or may be designated as an OHCDS and how these entities qualify
for designation as an OHCDS;

•

The procedures for direct provider enrollment when a provider does not voluntarily agree
to contract with a designated OHCDS. Again, it is important to keep in mind that
providers may not be mandated to contract with an OHCDS;

•

The method(s) for assuring that participants have free choice of qualified providers when
an OHCDS arrangement is employed. Participants must be able to select any qualified
provider that has contracted with the OHCDS or select a provider that has not contracted
with the OHCDS;

•

The method(s) for assuring that providers that furnish services under contract with an
OHCDS meet applicable provider qualifications under this waiver. The use of an
OHCDS arrangement does not in any way negate the requirement that providers meet
applicable qualifications;

•

How the state assures that OHCDS contracts with subcontracted providers meet
applicable Medicaid requirements (e.g., the maintenance of necessary documentation for
the services furnished by the subcontractor); and

•

How the state assures financial accountability when an OHCDS arrangement is used.
That is, how the state ensures that the billings made by the OHCDS are valid. In
addition, describe how the flow of billings and payments between the state and the
OHCDS and its subcontractors must not result in excessive payments to the OHCDS.

When an OHCDS arrangement is employed, it may not be structured in a fashion that has the
effect of claiming administrative expenses as service expenses. For example, when an OHCDS
entity performs administrative activities, a state may compensate the OHCDS for such activities
and claim such costs at the appropriate administrative claiming rate and in accordance with the
approved cost allocation plan. In other words, the amount that the OHCDS is paid for the
provision of waiver services may not be diverted to administrative activities.
Similarly, the amount that an OHCDS bills for waiver services are expected to match in the
aggregate the amount that it expends to provide services plus the amount that it pays its

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subcontractors. An OHCDS may not retain excess payments and divert those payments to other
uses.
CMS Review Criteria
When a waiver employs OHCDS arrangements:
•
•
•
•
•
•

The state describes the types of entities that are designated as an OHCDS.
The state’s methods of designating entities to function as OHCDS are specified, and
these entities meet the regulatory definition of an OHCDS.
OHCDS arrangements preserve participant free choice of providers.
Waiver providers are not required to contract with an OHCDS in order to furnish
services to participants.
There are adequate safeguards to ensure that OHCDS subcontractors possess the
required qualifications.
The OHCDS arrangement provides for appropriate financial accountability
safeguards.

Item I-3-g-iii: Contracts with MCOs, PIHPs or PAHPs
Instructions
Indicate whether the state contracts with MCOs, PIHPs, or PAHPs to furnish waiver services. If
so, specify whether such contracts fall under the authority of section 1915(a)(1) of Act or are
entered into under the provisions of a managed care/section 1915(c) concurrent waiver. When
the state does not contract with managed care entities to furnish waiver services, select “not
applicable.”
Technical Guidance
When a state contracts with managed care entities under the provisions of section
1915(b)/1915(c) concurrent waiver, the section 1915(b) waiver application will be reviewed by
CMS to obtain information about the types of entities with which the state contracts. In addition,
state contracts with managed care entities are subject to CMCS review.
Under the provisions of section 1915(a)(1) of the Act, a state may contract with a Managed Care
Organization (MCO), a prepaid inpatient health plan (PIHP) or prepaid ambulatory health plan
(PAHP) organizations (as defined in 42 CFR § 438.2) to furnish waiver and other services to
waiver participants. Such organizations may furnish not only waiver services but also other
services under the state plan. Contracts with these organizations may be risk-based, provide for
shared risk, or be no-risk arrangements. The state may make capitated prepayments to these
organizations. Absent a concurrent section 1915(b) waiver, waiver participants may not be
required to obtain waiver services through these organizations. Participants must have free
choice in electing to enroll with a health plan to obtain waiver or other services or to obtain
services from other waiver providers not affiliated with the health plan.
MCO, PIHP and PAHP contracts entered into under the provisions of section 1915(a)(1) are
subject to separate CMS review. This 1915(c) waiver application itself does not provide the
authority for a state to contract with such organizations. When managed care entities are used to
furnish waiver services under the provisions of section 1915(a)(1), specify (a) the geographic
areas served by these organizations; (b) the waiver and other services furnished by these
organizations; and (c) how payments are made to organizations.
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CMS Review Criteria
When waiver services are furnished by managed care entities under the provisions of
§1915(a)(1) that provide for the voluntary enrollment of waiver participants, the waiver
specifies:
•
•
•

The geographic areas served by these organizations.
The services furnished by these organizations.
How payments are made to organizations.

Appendix I-4: Non-Federal Matching Funds
Overview
In this section, the sources of the non-federal share (e.g., matching funds) of computable waiver
costs needs to be delineated. “Computable waiver costs” means adjudicated payments that have
been made to waiver providers less any adjustments that change the cost of the service to
Medicaid (e.g., the liability by another party for part of the cost of care, such as co-pays
indicated in Appendix I-7, or third party (e.g., Medicare) obligations). Only computable waiver
costs may be claimed for federal financial participation. The non-federal share of computable
waiver costs must be provided exclusively by the state or by the state and local governmental
entities (e.g., counties), as provided in 42 CFR §433.51.
The Appendix requires the identification of the sources of the non-federal share provided by the
state and, if applicable, localities. In each case, the sources are broken down into various
subcategories. Terms used in this Appendix are defined as follows:
Intergovernmental Transfer (IGT) means funds are transferred from another state agency or a
local government entity to the Medicaid agency to be utilized as the non-federal share. For
example, if funds are appropriated to a state’s developmental disabilities agency that operates the
waiver but provider billings are paid using the MMIS system at the Medicaid agency, the
developmental disabilities agency may make an intergovernmental transfer to the Medicaid
agency to provide the non-federal share. Similarly, if local government entities are obligated to
provide all or a portion of the non-federal share, they may meet this obligation by transferring
funds to the Medicaid agency.
Certified Public Expenditure (CPE) means that a state or local government agency expends funds
(i.e., pays providers for waiver services or directly incurs expenses for services furnished by the
entity) and submits the total amount expended to the state Medicaid agency. For example, a
county may be responsible for 20% of the costs of waiver services. The county pays providers of
waiver services using county funds and submits the amount of its total computable payments to
the state Medicaid agency. The Medicaid agency would submit the CPE to CMS and FFP would
be available as a percentage of the total computable cost of the service. The Medicaid agency
payment to the county would be the federal share of the county waiver costs funded through
CPEs. The state Medicaid agency would make payment to the county for the remaining 80% of
the computable costs of waiver services whereby the non-federal share is derived from other
state sources (e.g., appropriations to the state Medicaid agency or an IGT from another state
agency).

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It is permissible for local government resources to constitute a portion of the non-federal share of
waiver computable costs, as provided in 42 CFR § 433.53(b). However, in accordance with 42
CFR § 433.53(c)(2), whenever a state provides for local financial participation in the costs.
Detailed Instructions for Completing Appendix I-4
Item I-4-a: State Government Level Source(s) of the Non-Federal Share of Computable
Waiver Costs
Instructions
Select the applicable state sources of the non-federal share of computable waiver costs. Where
specified, provide the additional information about these sources.
Technical Guidance
State sources of the non-federal share may include:
•

The direct appropriation of state tax revenues to the State Medicaid agency;

•

State tax revenues appropriated to another state agency that are transferred to the state
Medicaid agency via IGT or are certified as expenditures (CPE). When the source of the
non-federal share is another state agency, specify the state agency or entity to which the
appropriation is made, the underlying sources of revenue of the funds that are transferred
(e.g., state tax revenues), and describe in detail the mechanism (IGT or CPE) that is
utilized to transfer the funds to the Medicaid agency; and,

•

If there are other state level source(s) of funds other than the appropriation of state tax
revenues, specify in detail: (a) the source of funds (e.g., program revenues, provider fees
(but not taxes)); (b) the state entity or agency that receives the funds; and, (c) the
mechanism (IGT or CPE) that is employed to transfer and/or certify the funds to the
Medicaid agency. Also specify any matching arrangement (e.g., whether the funds fully
provide for the non-federal share or only a portion of the non-federal share).
CMS Review Criteria
When the non-federal share is from sources other than the direct appropriation of state tax
revenues to the Medicaid agency:
• The state-level sources of the non-federal share of computable waiver costs are
specified.
• When funds are transferred from another state agency or other funds are used for the
non-federal share, the underlying sources of these funds meet applicable federal
requirements.
• When IGTs or CPEs are used, the mechanism used to transfer funds to the state
Medicaid agency or verify the expenditures are specified and meet federal
requirements.
• When CPEs are utilized, the criteria must be consistent with I-2-c.

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Item I-4-b: Local Government or Other Source(s) of the Non-Federal Share of Computable
Waiver Costs
Instructions
If local government entities do not provide any part of the non-federal share through IGT or
CPE, select not applicable. If local governments provide a portion of the non-federal share,
select one or both of the next two responses and provide the information requested.
Technical Guidance
When local government entities provide a portion of the non-federal share, provide the following
as applicable:
•

Appropriation of Local Government Revenues. When the funds provided by local
government are local tax revenues, specify the governmental body that levies taxes that
underwrite the non-federal share, the sources of revenue that are utilized as the nonfederal share, and the mechanism (IGT) or (CPE) for transferring and/or certifying funds
to the Medicaid agency. Include a citation for any applicable state laws concerning the
provision of local funds to the state to meet the non-federal share of computable waiver
costs.

•

Other Local Government Sources. If there are local government sources of funds other
than local tax revenues that are used to meet the non-federal share of computable waiver
costs, specify the source(s) of these funds, the local government entity or agency that
receives these funds, and the mechanism (IGT or CPE) used to transfer and/or certify
funds to the Medicaid agency.

CMS Review Criteria
When there are local government sources of the non-federal share:
• The local government sources of the non-federal share of computable waiver costs are
specified.
• When local tax funds are transferred by local governments or other funds are used for
the non-state federal share, the underlying sources of these funds meet applicable
federal requirements.
• When IGTs or CPEs are used, the mechanism used to transfer funds to the state
Medicaid agency or verify the expenditures are specified and meet federal
requirements.
• When CPEs are utilized, the criteria must be consistent with I-2-c.
Item I-4-c: Information Concerning Certain Sources of Funds
Instructions
Indicate whether any of the sources of funds listed make up any part of the non-federal share of
computable waiver costs. If any are used, describe the source of funds in detail.
Technical Guidance
•

Health Care-Related Taxes. The levying of health care-related taxes to meet the nonfederal share of Medicaid costs is controlled by the regulations at 42 CFR § 433.55 et
seq. Waiver services are not among the classes of services for which a broad-based
provider tax may be levied.
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•

Provider-Related Donations. Provider-related donations are considered a permissible
source of the non-federal share of the computable costs of waiver services to the extent
that such donations comply with the provisions of 42 CFR § 433.54 concerning bona fide
provider-related donations.

•

Federal Funds. In general, federal funds regardless of source may not be used to meet
the non-federal share of computable waiver costs. One exception has been the CMSapproved use of Real Choice Systems Change grant funds in some instances to meet the
non-federal share of Medicaid services furnished under the auspices of a grant. Only
when there is specific authorization in federal law may federal funds be used for the nonfederal share.

CMS Review Criteria
Only permissible sources may be utilized to fund the non-federal share.
Appendix I-5: Exclusion of Medicaid Payment for Room and Board
Overview
42 CFR § 441.310(a)(2) prohibits making Medicaid payments for room and board (i.e., housing,
food, and utility costs) except when the participant is receiving respite outside of a private
residence in a facility approved by the state or when the participant requires a live-in caregiver
(addressed in Appendix I-6). For purposes of this provision, the term “board” means three meals
a day or any other full nutritional regime. Medicaid payments may be made for a meal provided
to a person in a day activity such as adult day health services. The state must assure CMS that
payments are not made for room and board except as explicitly allowed in 42 CFR §
441.310(a)(2).
When waiver services are provided in residential settings that are not the participant’s own home
or the family home, the state needs to describe the methodology that is employed to exclude the
costs of room and board from the payments for the services furnished in such living
arrangements (i.e., ensure that payment is only made for the service component).
Detailed Instructions for Completing Appendix I-5
Item I-5-a: Services Furnished in Residential Settings
Instructions
Select whether waiver services are furnished in residential settings other than the participant’s
own private residence. If so, complete Item I-5-b. Otherwise, do not complete I-5-b.
Item I-5-b: Method for Excluding the Cost of Room and Board Furnished in Residential
Settings
Instructions
In the text field, describe the methodology that is used to exclude Medicaid payment for room
and board in residential settings.

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Technical Guidance
Acceptable methods to exclude the costs of room and board may include separating room and
board costs from service costs in determining payment rates or basing payments solely on service
costs.
CMS Review Criteria
The methodology that is employed assures that the costs of room and board have been isolated
and excluded from payments for services in applicable residential settings.
Appendix I-6: Payment for Rent and Food Expenses of an Unrelated Live-In Caregiver
Overview
Section 4741(a) of the Omnibus Budget Reconciliation Act of 1990 amended section 1915(c)(1)
of Act to provide that the room and board exclusion does not include an amount established by
the state to reflect the portion of costs of rent and food attributable to an unrelated personal
caregiver who resides in the same household with a participant who requires a live-in caregiver.
Regulations concerning this provision are located at 42 CFR § 441.310(a)(2)(ii). Unrelated is
defined as someone who is unrelated by blood or marriage to any degree. A personal caregiver
provides a covered waiver service (as specified in the waiver) to meet the participant’s physical,
social, or emotional needs (as opposed to services not directly related to personal care giving,
i.e., housekeeping or chore services). When a waiver service is provided by an unrelated, live-in
personal caregiver, FFP is available to compensate the waiver recipient for the additional costs
they may incur for the rent and food for such caregiver. Under Medicaid and section 1634 and
SSI criteria rules, in order for the payment not to be considered income to the recipient, payment
for the portion of the costs of rent and food attributable to an unrelated live-in personal caregiver
must be routed through the provider specifically for the reimbursement of the waiver participant.
FFP for live-in caregivers is not available in situations when the participant lives in the
caregiver's home or a residence owned or leased by the provider of waiver services.
This provision does not provide an exception to other Medicaid requirements resulting in a
change in the way an individual's income may be counted in determining Medicaid eligibility or
allow payment to a participant rather than a provider of service.
In the application, live-in caregiver is treated as a waiver service and needs to be included in the
list of services contained in Appendix C-1 and specified in Appendix C-3. The costs of live-in
caregiver needs to be broken out separately in Appendix J-2 in the computation of Factor D.
Completion of Appendix I-6
Instructions
Select whether the waiver provides for the payment of the rent and food expenses of an unrelated
caregiver. If so, explain: (a) the method that is used to apportion the additional costs of rent and
food attributable to the unrelated live-in personal caregiver that are incurred by the individual
served on the waiver and (b) the method used to reimburse these costs that routes payment
through the provider.
Technical Guidance
Any reasonable method may be employed to apportion the cost of rent and food, subject to CMS
review and approval, so long as the method is based on the costs incurred by the participant.
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Reimbursement to the participant must be made by the provider (e.g., passed along by the
provider to the participant).

CMS Review Criteria
When payment is made for the rent and food expenses of an unrelated caregiver:
• The apportionment method used should provide that only the additional rent and food
costs to the participant associated with having a live-in caregiver are reimbursed.
• Only costs incurred by the participant are reimbursed.
• The method of making payment for live-in caregiver must route the payment through
the provider but clearly provide for the reimbursement of the participant.
Appendix I-7: Participant Co-Payments for Waiver Services and Other Cost Sharing
Overview
In this Appendix, the state specifies whether it imposes co-payments on waiver services (in Item
I-7-a) or imposes other cost-sharing arrangements associated with participation in a waiver (in
Item I-7-b). The imposition of co-payments or other cost sharing are governed by the provisions
of section 1916 and section 1916A of the Act. The amount of these charges that may be imposed
is subject to federal limits. As described at 42 CFR §§ 447.51 through 447.57, states have
flexibility to impose cost sharing for most covered services. In general, cost sharing is limited to
nominal amounts (approximately $4 or less), but states have flexibility to charge higher cost
sharing to individuals with income above 100% of the federal poverty level.
Any nominal cost sharing is generally applicable to all Medicaid beneficiaries, except those
specifically exempted by statute or regulation. States have the option to exempt HCBS waiver
recipients from all cost sharing, if they are subject to the post-eligibility treatment of income
requirements. And because section 1915(c) of the Social Security Act provides for a waiver of
comparability, states may exempt additional individuals beyond those specifically exempted in
statute and regulation.
When co-payments are imposed, no provider may deny services to an individual who is eligible
for the services on account of the individual's inability to pay the cost sharing unless the person’s
income exceeds 100% of poverty and the state elects to permit the provider to enforce the costsharing. In addition, when a co-payment is imposed, the amount of the co-payment must be
deducted in determining the amount of the computable claim for FFP regardless of whether the
participant actually made the co-payment. Co-payments are considered to have been collected
by the provider regardless of whether the participant makes an actual payment to the provider.
The post eligibility treatment of income process which determines the individual’s patient
liability (if any) does not fall under the cost sharing requirements specified at section 1916 and
section 1916A of the Act. Therefore, post eligibility is not included in Appendix-I. Post
eligibility treatment of income is included in Appendix B-5 of the waiver application.
Detailed Instructions for Completing Appendix I-7
Both items I-7-a and I-7-b need to be completed.

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Item I-7-a: State Requirement for Co-pays
Instructions
Indicate whether co-payments or similar charges are imposed on waiver participants for one or
more waiver services. If no co-payments are charged, proceed to Item I-7-b. If co-payments are
charged, complete the remaining items before proceeding to Item I-7-b.
Item I-7-a-i: Co-Pay Arrangement
Instructions
Specify the type of charge that is imposed on waiver participants.
Technical Guidance
Charges may include a nominal deductible, co-insurance, co-payment or other similar charge. If
another type of charge is imposed, it needs to be described in detail. Typically, if a charge is
made, it usually takes the form of a co-payment (i.e., a fixed charge per unit of service).
Item I-7-a-ii: Participants Subject to Co-pay Charges for Waiver Services
Instructions
Specify the groups of waiver participants who are subject to co-payment.
Technical Guidance
As described at 42 CFR § 447.56 specific groups of individuals are exempt from all cost sharing
charges. For example, children up to the age of 18 (or up to age 19, 20 or 21 at the option of the
state) are excluded from all cost sharing, with certain exceptions. Because section 1915(c) of the
Act allows for a waiver of comparability, states may exempt additional groups of waiver
participants.
Item I-7-a-iii: Amount of Co-Pay Charges for Waiver Services
Instructions
Specify each waiver service for which a co-payment charge is made, the amount of the charge,
and the basis of the charge.
Technical Guidance
In the case of waiver participants with incomes less than 100% of federal poverty level, the
amount of the co-payment charge may not exceed the maximum amounts described in 447.52(b).
Express the amount of the charge on a per-unit basis (e.g., $1.50/ visit). Persons with incomes in
excess of 100% of federal poverty level may be charged cost sharing of up to 10% of the cost of
the service and those with incomes above 150% of federal poverty level may be charged cost
sharing of up to 20% of the cost of the service. If different charges are made to one or both of
these higher income groups, specify those charges and specify the basis of the charge. The basis
may be the waiver’s standard, fixed fee payment schedule for the services subject to co-payment.
Item I-7-a-iv: Cumulative Maximum Charges
Instructions
Specify whether there is a cumulative maximum amount of co-payments that may be charged to
a waiver participant. When there is a maximum, specify the amount and the period (e.g., month,
quarter) to which the maximum applies.
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Technical Guidance
Per 42 CFR § 447.54(d), the waiver may specify a cumulative maximum amount of co-payments
(e.g., no more than $10 per month). When the participant is subject to co-payments for other
state plan services, the state may apply the maximum amount provided under the state plan for
all Medicaid services.
Item I-7-b: Other State Requirement for Cost Sharing
Instructions
Select whether the state imposes a premium, enrollment fee, or similar charge on waiver
participants. If so, describe the arrangement in detail.
Technical Guidance
42 CFR § 447.55 allows states to impose premiums, enrollment fees or other similar charges on
individuals with income above 150% of poverty. Under a premium arrangement, the recipient
must make a fixed, periodic payment (as opposed to a co-payment which is imposed on a per
service basis). Indicate whether there is such an arrangement associated with the waiver. If so,
specify in detail:
•

The type of arrangement;

•

The amount of the charge;

•

The groups of participants who are subject to the charge and the groups excluded in
compliance with 42 CFR § 447.56. The groups who are excluded must
include all individuals described in 42 CFR § 447.56; and may include additional groups
of waiver participants,

•

The mechanisms for the collection of charges and reporting the amount collected on the
CMS 64. Premium and cost sharing amounts must be applied to reduce the computable
claim for federal financial participation.

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CMS Review Criteria
The cost sharing arrangement complies with the applicable requirements contained in 42 CFR
§ 447.50 et seq.
When the state imposes a premium, enrollment fee, or similar charge on waiver participants,
the state has specified:
• The type of charge
• The amount of the charge
• The groups of participants who are subject to the charge and the groups excluded- this
must comply with 42 CFR § 447.56.
• For each waiver service for which a co-payment is made, the amount and basis of the
charge. The amount of the co-payment charge may not exceed the schedule of
allowable charges contained in 42 CFR § 447.54(a)(3) that establishes maximum
charges based on the cost of a service.
• Whether there is a cumulative maximum amount of co-payments that may be charged
to a waiver participant?
• The mechanisms for the collection of charges and reporting the amount collected on
the CMS 64. Premium and cost sharing amounts must be applied to reduce the
computable claim for the federal financial participation.

Appendix J: Cost Neutrality Demonstration
Brief Summary
In order for a waiver to be approved, in accordance with section 1915(c)(2)(D) of the Act and 42
CFR § 441.302(e), the state must demonstrate to the satisfaction of CMS that the waiver is cost
neutral during each year that the waiver is in effect. In this Appendix, the cost neutrality of the
waiver is demonstrated. The Appendix has two components:
•

Appendix J-1 provides a composite overview of the demonstration that the waiver is cost
neutral.

•

Appendix J-2 contains the basis of the estimates of the factors that make up the cost
neutrality demonstration.

Cost Neutrality Formula
Section 1915(c)(2)(D) of the Act requires that the state assure that the average per capita
expenditure under the waiver during each waiver year not exceed 100 percent of the average per
capita expenditures that would have been made during the same year for the level of care
provided in a hospital, nursing facility, or ICF/IID under the state plan had the waiver not been
granted.
42 CFR § 441.302(e) requires that the expenditures upon which the cost neutrality demonstration
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is based be reasonably estimated and well documented and that the estimate must be annualized
and cover each year of the waiver period.
The equation set forth in 42 CFR § 441.303(f)(1) specifies the components of the cost neutrality
demonstration. This equation is:
D+D′ ≤ G+G′.
Where:
•

The symbol ‘‘≤’’ means that the result of the left side of the equation must be less than or
equal to the result of the right side of the equation.
• D = the estimated annual average per capita Medicaid cost for home and communitybased services for individuals in the waiver program.
• D′ = the estimated annual average per capita Medicaid cost for all other services provided
to individuals in the waiver program.
• G = the estimated annual average per capita Medicaid cost for hospital, NF, or ICF/IID
care that would be incurred for individuals served in the waiver, were the waiver not
granted.
• G′ = the estimated annual average per capita Medicaid costs for all services other than
those included in factor G for individuals served in the waiver, were the waiver not
granted.
This equation takes into account both waiver services (factor D) and institutional costs (factor G)
as well as the costs of furnishing other Medicaid services to waiver participants (factor D′) and
the non-institutional Medicaid costs for persons receiving institutional care (factor G′). For
purposes of the equation, the prime factors (D′ and G′) include the average per capita cost for all
state plan services and expanded Early & Periodic Screening, Diagnosis and Treatment (EPSDT)
services (when the waiver covers children) that have been utilized but not accounted for in other
formula values. Costs associated with the waiver that are claimed for administrative FFP, are not
included in the formula.
Also, for purposes of this equation the term “per capita cost” means estimated expenditures
during each year of the waiver divided by the number of unduplicated service recipients during
each waiver year. The estimates of per capita costs may not be based on an estimate of the
number of “full year equivalents” who will be served each year.
Factor D in the equation is derived from the estimates of service utilization and costs in
Appendix J-2-d (discussed below). Factor D′ is estimated using experience from previous
waiver periods (renewal applications) or other sources of information (in the case of a new
waiver application). Factor G is estimated based on the costs of institutional services for the
specific level(s) of care specified in the waiver. Factor G′ is estimated based on the costs of
other Medicaid services furnished to individuals who receive institutional services for the
specific level(s) of care specified in the waiver. The basis for the estimates of each of these
factors were derived is described out in Appendix J-2-c.
For waivers that cover individuals with a particular diagnosis or condition, states may utilize
target-group specific data. For example, in estimating cost for waiver participants, a state may
estimate the average per capita expenditure for the targeted individuals without including
expenditures of other individuals (not meeting targeting criteria) who are inpatients of the
institutional comparison group. If target-group specific data is used, cost/utilization data
documenting how the state’s estimates were derived need to be included with the waiver
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application (i.e., a claims summary listing to document the average per capita institutional
expenditure for the target population). This documentation is provided in Appendix J-2-c.
Once the waiver is approved, in accordance with 42 CFR § 441.302(h), the state must annually
submit financial and statistical information to CMS concerning each equation factor and, in the
case of factor D, detailed information concerning service utilization and costs for each service
included in the waiver. This information is submitted via Form CMS-372(S). Please note that
functions that are provided as an administrative activity are expected to be done so in accordance
with the approved cost allocation plan. The cost allocation plan is not approved via the 1915(c)
application.
Appendix J-1: Composite Overview and Demonstration of Cost-Neutrality Formula
Overview
This Appendix provides an overview of the cost neutrality demonstration for each waiver year.
Detailed Instructions for Completion of Appendix J-1
Instructions
In the row captioned “level(s) of care,” specify the level or levels of care for which the waiver
serves as an alternative (as specified in Item 1-F of the Application). For each year the waiver
will be in effect, insert the appropriate values for each cost neutrality formula factor into the
table.
Technical Guidance
When a waiver serves individuals at more than one level of care (e.g., nursing facility and
hospital), the estimates of Factors D', G, and G' that are inserted into the table are the weighted
average of each factor (Note: Factor D is estimated across all waiver participants and, thereby,
already is a weighted average). A weighted average is calculated as follows:
•

•
•

For each level of care, calculate the total estimated expenditures associated with each
factor for each waiver year. Total estimated expenditures are calculated by multiplying
the level-of-care estimate of the formula value for the waiver year by the unduplicated
number of individuals who are expected to utilize the services associated with the
formula factor;
Sum the total estimated expenditures for the formula factor for the waiver year; and
Divide the sum of total expenditures by the sum of the total unduplicated number of
individuals who are expected to utilize the services associated with the formula factor.

Level of Care

Factor G Estimate

# of Users

Total Expenditures

Level of Care 1

$30,000

100

$3,000,000

Level of Care 2

$60,000

100

$6,000,000

Total

N/A

200

$9,000,000

Weighted Average ($9,000,000/200)

$45,000

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The underlying calculations of the weighted averages of the formula factors are not submitted
with the waiver application. However, the work sheets containing these calculations are
expected to be available to CMS upon request through the Medicaid agency and/or the operating
agency (if applicable). When a waiver encompasses more than one level of care, it is not
required that the waiver be cost neutral at each level of care so long as it is cost-neutral on a
composite basis.
The CMS-372(S) report requires reporting each cost neutrality formula factor by level of care
and on a composite, weighted average basis.
CMS Review Criteria
• The data makes sense and aligns across the waiver years.
• The waiver is cost neutral each waiver year.
Appendix J-2 - Derivation of Estimates
Overview
In this Appendix, information is provided about how the estimate for each cost neutrality
formula factor has been derived. The Appendix also provides for showing the detailed estimate
of Factor D.
Detailed Instructions for Completing Appendix J-2
Item J-2-a: Number of Unduplicated Participants Served
Instructions
In Table J-2-a, insert the total number of unduplicated individuals who will receive waiver
services during each year the waiver is in effect. This number needs to match the corresponding
figures in Table B-3-a in Appendix B-3. In the web-based application, the two tables are linked
to ensure consistency. When a waiver serves individuals at more than one level of care, show
the breakdown of waiver participants by level of care in the table, noting each level of care in the
column heading.
Technical Guidance
The total number of unduplicated waiver participants who will be served each year the waiver is
in effect is an essential element in calculating Factor D in the cost neutrality formula. The
figures included in this table need to match the corresponding figures in the year-by-year
estimates of Factor D that are derived in Item J-2-d. When a waiver serves individuals at more
than one level of care, the sum of the two right hand columns needs to equal the total in column
headed “total unduplicated number of waiver participants.”
CMS Review Criteria
The unduplicated count aligns and makes sense across the waiver years.

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Item J-2-b: Average Length of Stay
Instructions
In the text field, describe the basis of the estimate of the average length of stay on the waiver by
participants in Item J-2-d.
Technical Guidance
Average length of stay (ALOS) is a statistic that describes the number of days on average during
a waiver year that an individual participates in the waiver. ALOS can be affected by a variety of
factors, including participant turnover (the entry and exit of individuals from the waiver) and the
phase-in or phase-out of the waiver. ALOS is calculated by dividing the total number of
“enrolled days” of all waiver participants by the unduplicated number of participants. In the case
of an approved waiver, ALOS information is reported on CMS-372(S) report.
As noted previously, ALOS usually affects the calculation of Factor D in the cost neutrality
equation. For example, 220 daily units of a service such as adult day health would be provided
to participants who are continuously enrolled throughout the entire waiver year. However, if the
ALOS length of stay on the waiver is 292 days, then the expected utilization rate of adult day
health services per unduplicated participant would be 176 daily units (292/365 = O.8; 0.8 x 220
= 176). As a general matter, ALOS should be factored in when estimating the utilization of each
waiver service in the calculation of Factor D.
In response to this item, describe the basis of the ALOS estimate that is included in the estimate
of Factor D tables in item J-2-d. The basis of the estimate may be based on:
•

•

•
•

CMS 372(S) Data. In the case of a waiver renewal, the ALOS estimate may be based on
actual prior year experience. Indicate whether the estimate is based on CMS-372(S) data
and the year of the report. In the case of a waiver renewal, when the estimate departs
from the CMS-372(S) baseline data, explain the basis of the alternate estimate.
Phase-In/Phase-Out Schedule. When waiver capacity is being phased-in or phased out,
ALOS is affected. For example, if capacity is being phased in, the ALOS estimate will
increase each waiver year until the phase-in is completed. If a phase-in/phase out
schedule is submitted along with the application (as Attachment #1 to Appendix B-3),
that schedule may serve as the basis of the ALOS estimate for the years affected by
phase-in/phase-out. Once the phase-in is completed, explain the basis of the ALOS
estimate for the subsequent waiver years.
Experience in Similar Waivers. In the case of a new waiver, the ALOS estimate may
be based on experience in another waiver that the state (or another state) operates which
serves a similar target population.
Alternative Basis. Especially in the case of a new waiver, the estimate may be based on
the experience of a state-funded program that serves a similar target group or from other
data sources. Provide a complete description of the information that was employed to
estimate the ALOS.

However, the ALOS estimate is derived, provide a complete description of the basis of the
estimate.
CMS Review Criteria
The state provided a complete description of the basis of the ALOS estimate.
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Item J-2-c: Derivation of Estimates of Each Factor
In this item, the derivation for the estimates of each factor in the cost-neutrality formula is
specified. In the case of a renewal waiver (or a new waiver to replace an approved waiver), as a
general matter it is expected that the basis of the derivation of each factor will be the data that the
state has reported via the CMS-372(S) trended forward to reflect inflation adjustments.
Departures from the CMS -372(S) baseline are expected to be explained and justified. For each
factor derivation, describe the source of baseline data used to calculate the factor, including the
date from which the baseline data represents. Describe the basis of growth trends or inflationary
adjustments used, including:
•

Data source used to obtain the trend or inflation rate

•

How the trend or inflation rate was calculated

•

If the growth trend is not based on CMS-372(S) data, why an alternate basis was used

When a renewal includes new services or modifications to current services, the estimates for
these services are expected to be explained and justified.
For waivers that apply only to individuals with a specific illness or condition, estimates that are
based only on the particular group may be used. As necessary and appropriate, include
references to supporting documentation for how these values were derived. As necessary, CMS
may request that the state supply the supporting documentation through the Medicaid agency
and/or the operating agency (if applicable).
Item J-2-c-i: Factor D Derivation
Instructions
In the text field, describe the basis of the estimates of Factor D.
Technical Guidance
The Factor D value is calculated by completing the tables contained in item
J-2-d. See also the instructions for completing Item J-2-d. Here, provide a complete explanation
of the how the values (except for ALOS and the unduplicated number of participants) contained
in that table were derived. In the case of a waiver amendment, if the state amends the cost
estimate table in Appendix J-2-d due to a change in Factor D, the state should also amend the
Factor D derivation in Appendix J-2-c to document the basis of the amended estimates.
The Factor D estimate is derived by estimating: (a) the unduplicated number of participants who
are expected to utilize each waiver service; (b) the number of units of services these participants
are expected to utilize during a waiver year (taking into account ALOS); and (c) the expected
average unit cost of each waiver service. These elements lead to the calculation of the total
estimated cost for each waiver service. These service-by-service costs are summed and divided
by the total number of unduplicated waiver participants for the waiver year in order to estimate
Factor D.
The explanation of the derivation of the Factor D estimate is expected to include the basis and
methodology used to calculate the estimates for: (a) the estimated number of service users; (b)
the estimate of the number of units/user; and (c) the average per unit cost. In particular:
•

Estimated number of users. In the case of waiver renewals and amendments, this
estimate should be based on actual experience as reported via the CMS-372(S) (e.g., the
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percentage of waiver participants who utilize a service), modified as appropriate to take
into account changes in the number of persons who will be served during the renewal
period. If the estimated number of users departs from the previous actual experience,
explain and justify the basis of the deviation.
In the case of new waivers or when additional services are being added in a waiver
renewal or an amendment, the explanation should detail the source of the information
upon which the estimate is based. The source may be a state study, utilization of similar
services in other waiver programs, or experience in other states that operate similar
waivers.
•

Units/User. The utilization rate should be reasonably estimated based on needs of the
target population and the average length of stay. Again, for waiver renewals, this
estimate should start with the actual experience as reported via the CMS-372(S) as the
baseline. If the estimated number of units/user departs from the previous actual
experience, explain and justify the basis of the deviation.
In the case of new waivers or when additional services are being added in a waiver
renewal, the explanation is expected to detail the source of the information upon which
the estimate is based. The source may be a state study, utilization of similar services in
other waiver programs, or the experience of other states that operate waivers that serve a
similar target population and offer comparable services.

•

Cost/Unit. For waiver renewals and amendments, this estimate should be based on
actual experience as reported via the most recently approved CMS-372(S). If the
estimated number of users departs from the previous actual experience, explain and
justify the basis of the deviation.
In the case of new waivers or when additional services are being added in a waiver
renewal, the explanation is expected to detail the source of the information upon which
the estimate is based. The source may be a state study, utilization of similar services in
other waiver programs, or experience in other states. The explanation should identify the
factor or factors that were used to trend unit costs forward across all waiver years. If a
particular service has several intensity levels or settings and associated unit costs, the
explanation of the derivation of unit costs should include information about each level
(i.e., the derivation of the weighted average unit cost included in the table in item J-2-d).
CMS reviews the estimates of unit costs with regard to the requirement that payments are
consistent with economy, efficiency, and quality of care. A state may be required to
provide additional justification if the amount of the payment appears to be excessive in
light of experience with waivers that provide similar services to like target populations.

Item J-2-c-ii: Factor D' Derivation
Instructions
In the text field, describe the basis of the estimates of Factor D'.
Technical Guidance
Factor D' is the estimated annual average per capita Medicaid cost for all services (state plan and
services required under EPSDT (when a waiver serves children)) that are furnished in addition to
waiver services while the individual is in the waiver. This calculation includes institutional costs
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when a person leaves the waiver for the institution and returns to the waiver in the same waiver
year. If a waiver participant does not return to the waiver following institutionalization, do not
include the cost of institutional care under D'. Do not include institutional costs incurred before
the person is admitted into the waiver. If institutional respite care is provided as a service under
this waiver, calculate its costs under Factor D. Do not duplicate these costs in the calculation of
Factor D'. If a waiver service is covered under the state plan and the service is defined
identically except for utilization limits, the state plan service, up to the imposed limit, would be
included under D'. The services under the waiver that exceed the state plan utilization limits
would be included under factor D as waiver costs.
In the case of section 1915(c) waivers that will operate with a concurrent Medicaid managed care
authority, include in factor D only the cost of capitation payments. Any additional services
provided by the managed care organization through savings or under section 1915(b)(3) do not
affect factor D, since they are funded by the capitation payment. Additional services, if provided
under the managed care authority application out of the HCBS waiver capitation payment, are
not considered section 1915(c) services and are not listed in the section 1915(c) application.
Estimates of Factor D' should not include the costs of prescribed drugs that will be
furnished to Medicare/Medicaid dual eligibles under the provisions of Part D. Include an
explanation of how the D' value is derived. In general, the D' value should be greater than or
equal to the G' value. Typically, institutional payments encompass the costs of health care
services that are furnished to institutional residents and, therefore, included in Factor G. In the
case of waiver participants, most health care services are obtained via the state plan. If factor D'
is less than factor G', provide an explanation of the reasons why this is the case. This situation
may arise when institutional payments do not encompass all services that are furnished to
institutional residents (for example, when the costs of day habilitation services furnished to
ICF/IID residents are paid for separately under the state plan). Factor D' may be computed using
the CMS-372(S) or statistically valid methods which are specified and submitted with the
application. If the D' is developed through sampling a comparable population, provide
information on the process used and how the D' value was derived.
Item J-2-c-iii: Factor G Derivation
Instructions
In the text field, describe the basis of the estimates of Factor G.
Technical Guidance
The Factor G value needs to reflect the average cost for the level(s) of institutional care that
would otherwise be furnished to waiver participants. Provide data ONLY for the level(s) of care
indicated in the waiver request. For waivers that apply only to individuals with a specific illness
or condition, estimates may be based on the institutional costs incurred for individuals with the
specific illness or condition. If institutional respite care is provided as a service under the
waiver, calculate its cost under Factor D. Do not duplicate these costs in the calculation of
Factor G.
New Waivers
When cost-neutrality estimates are based on the comparison of community costs to institutional
costs and the state does not wish to base its estimate of institutional costs on the costs of serving
individuals with specific illnesses or conditions, the projected first year and subsequent year
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Factor G values through the end of the waiver is expected to be based on the actual costs of
institutional services for all individuals at the relevant level(s) of care for the most recent year for
which such data are available. These actual costs may be trended forward by applying inflation
adjustments based on the current Medical Consumer Price Index unless higher rates are justified
or the state employs a different basis for estimating future costs (e.g., observed state trends in the
costs of institutional services). Specify the source of the data upon which the estimate of Factor
G is based and how those costs are adjusted year-by-year.
When a waiver serves persons who have a specific illness or condition, derive Factor G (for each
level of care) from the following: (1) except as discussed below, trends shown by CMS-372(S)
for another waiver that serves a similar population at this level of care (specify the other waiver
and related CMS-372(S) form that was used and indicate any adjustments made to the numbers.);
(2) actual case histories of individuals institutionalized with the specified disease or condition at
the relevant level of care. When this method is used, describe the methods that were used to
derive the estimate of Factor G; (3) state DRGs for the disease(s) or condition(s) indicated in the
request; or, (4) other method (include a description). In the application, provide a complete
explanation of how the derivation of the estimate of Factor G.
Renewal Applications
In the case of renewal applications, when the Factor G figures reported via the CMS-372(S) were
the same as the figures in the approved waiver rather than actual costs, a state may not use the
CMS-372(S) as the basis of its estimate of Factor G for the renewal period, including the
derivation of trend factors. Instead, the state should obtain and employ actual data for prior
periods in order to establish a revised baseline estimate of Factor G and the expected trend.
Item J-2-c-iv: Factor G' Derivation
Instructions
In the text field, describe the basis of the estimates of Factor G'.
Technical Guidance
Factor G' includes the cost of all other Medicaid services furnished while the individual is
institutionalized (including state plan and services required under EPSDT) and the cost of shortterm hospitalization (furnished with the expectation that the person would return to the
institution). When the waiver serves children, the G' value includes services required under
EPSDT that are not accounted for in the G value. In situations where a waiver will provide
services to individuals who, although requiring a NF level of care, are hospitalized because NF
placement is not possible, the actual cost of caring for these individuals in a hospital should be
shown in G'. When institutional respite care is provided as a service under this waiver, calculate
its cost under Factor D. Do not duplicate these costs in the calculation of Factor G'.
Explain how the G' value is derived, including any supporting documentation. The projected
first year G' value should not deviate substantially from previous year trends unless the state has
altered its Medicaid program. Inflation adjustments should reflect data in current Medicaid
Consumer Price Index unless other rates are justified.
In the case of waiver renewals, the estimate of Factor G' may be based on figures reported via the
CMS-372(S) only when the reported CMS-372(S) figures represented actual expenditures. If the
reported CMS-372(S) figures were the same as the figures in the approved waiver, a state may
not use the CMS-372(S) as the basis of its estimate of Factor G', including the derivation of trend
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factors. Instead, the state should obtain and employ actual data for recent prior periods in order
to establish a revised baseline estimate of Factor G' and the expected trend.
Estimates of Factor G' should not include the costs of prescribed drugs that will be furnished to
Medicare/Medicaid dual eligibles under the provisions of Part D.

CMS Review Criteria
• The state described the basis and the methodology used to determine the Factor D
value which is based on the estimated number of users, units/user, and cost/unit.
• If Factor D’ is not greater than or equal to Factor G’, the state provided an explanation
for this.
• If Factor D’ is developed through sampling a comparable population, the state has
provided information on the process used and how the D’ value was derived.
• The projected first year G’ value does not deviate substantially from previous year
trends unless the state has altered its Medicaid program.
For all cost-neutrality formula factors:
• The basis of all Factor estimates is fully documented, and estimates are evidencebased and appropriately justified.
• Deviations from CMS-372(S) data are adequately explained, justified and
documented.
• The state’s factor D, D’, G and G’ derivation details the trend factors, including
details of the data sources, how factors were trended forward, and justification of
using sources outside of CMS-372(S) reports.
Item J-2-d: Estimate of Factor D
Instructions
Select whether the waiver operates concurrently with a section 1915(b) waiver, or other
Medicaid authority utilizing capitated arrangements (i.e., 1915(a), 1932(a), Section 1937). If
not, complete the tables included in Item J-2-d-i. If so, complete the tables included in Item J-2d-ii.
Technical Guidance
The two sets of tables are similar. However, in the case of managed care/section 1915(c)
concurrent waivers, additional information needs to be provided (see below).
In the case of a waiver amendment, if the state amends the cost estimate table in Appendix J-2-d
due to a change in Factor D, the state should also amend the Factor D derivation in Appendix J2-c to document the basis of the amended estimates.
J-2-d-i: Non-Concurrent Waivers
The table is expected to be completed for each year that the waiver is in effect. This table is
auto-populated by the entries in Appendices C-1/C-3. When a service listed in Appendix C-1
encompasses two or more discrete services that are reimbursed separately, these component
services must be shown in the table. For example, if a state covers “day supports” but day
supports is composed of day habilitation, supported employment and community access services,
each component of day support needs to be listed and accounted for separately. When a service
in Appendix C-1 is a bundled service, each component of the service needs to be shown.
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With respect to column 1, the unit of service (for example, day, hour, month, trip, etc.) needs to
be identified for each service. The unit should be descriptive of the service and not a generic
term, such as ‘unit’. With respect to column 3, keep in mind that the estimated number of units
per user should reflect the estimated ALOS rather than the potential maximum number of service
units that a participant may utilize. Partial units may not be used. See the State Medicaid
Manual for additional information on units of service.
The average cost per unit (column 4) is expected to be reasonably estimated. The estimate
should be based on expected payment rates for the service. When payment rates vary, the
estimate should be based on the expected mix of payment rates.
The figures in this table should follow these rules:
•
•
•
•

Average Number of Users. The average number of users needs to be expressed as a
whole number (i.e., 235 users not 234.8 users);
Average Number of Units per User. May be expressed as a whole number or in
decimal form.
Average Cost per Unit. Express in dollars and cents.
Total Cost. Total cost is expressed as the product of the average number of users, the
average number of units per user and the average cost per unit. Total cost is expressed in
dollars and cents.

The total cost is auto calculated based on the number of users, average number of units per user,
and average cost per unit.
CMS Review Criteria
• The unit of service is identified for each service.
• The estimated number of units per user reflect the estimated ALOS rather than the
potential maximum number of service units that a participant may utilize.
J-2-d-ii: Concurrent Waivers
The Factor D table for concurrent section 1915(b)/1915(c) waivers or other concurrent managed
care authorities utilizing capitated payment arrangements (i.e., 1915(a), 1932(a), Section 1937)
includes an additional column to indicate whether a waiver service is included in the capitation
rate paid to managed care entities or will be paid outside the capitation rate (i.e., the state will
make payment directly for the service). For waiver services included in the capitation rates paid
to managed care entities, states need to indicate this by checking off the “Capitated” column in
the Appendix J-2-d-ii table.
When there are services paid outside the capitation rate, states need to calculate the total of all
waiver costs and calculate separately the subtotals for services paid within the capitation rate and
services paid outside the rate. These estimates are calculated automatically. It also is necessary
to calculate the average cost per unduplicated participant for all waiver services and the average
costs for services paid within the capitation rate and outside the capitation rate. This information
will be employed by CMS in evaluating the cost-effectiveness of the section 1915(b) waiver.

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CMS Review Criteria
If there are services paid outside the capitation rate, the state has calculated:
• The total of all waiver costs,
• The subtotal for services paid within the capitation rate,
• The subtotal for services paid outside the rate,
• The average cost per unduplicated participant for all waiver services, AND
• The average costs for services paid within and outside the capitation rate.

Glossary of Terms and Abbreviations
90-day Clock

Section 209(b)
State

300% of SSI
Group
§ 435.217 Group
Section 1115
Research and
Demonstration
Waiver

Section 1634 State

Section 1915(b)

The informal term for the ninety-day calendar period within which CMS
must approve or disapprove a state’s request to amend its State plan,
initiate a new waiver, renew a waiver, or amend a waiver. The 90-day
clock begins on the date that CMS receives the request from a state,
either electronically or by other delivery method.
Refers to the statutory authority allowing states to have more restrictive
financial methodologies for the aged, blind, or disabled than those of the
SSI program. States electing this option may not use more restrictive
standards than were in effect on January 1, 1972 and must permit
individuals to deduct incurred medical expenses from income through
Medicaid spenddown so that they may qualify for Medicaid.
See Special Income Group
See Special Home and Community-Based Waiver Group
Research and demonstration programs that operate under waivers that
are granted under the provisions of section1115 of the Social Security
Act to authorize experimental, pilot, or demonstration project(s) that, in
the judgment of the Secretary of Health and Human Services are likely
to assist in promoting the objectives of the Act, including but not limited
to Title XIX (the Medicaid statute) of the Act. The 1115 research and
demonstration authority has been employed to implement alternative
approaches to the delivery of Medicaid services.
A state that has entered into a contract with the Social Security
Administration (SSA) under the provisions of section 1634(a) of the Act
for SSA to determine Medicaid eligibility at the same time that
eligibility for SSI benefits and/or Federally- administered state
supplementary payments is determined. In 1634 states, SSI beneficiaries
do not make a separate application for Medicaid.
A provision of the Social Security Act that authorizes the Secretary of
HHS to grant certain waivers of Medicaid statutory requirements. The
1915(b) authority may be used to: (a) mandate the enrollment of
Medicaid beneficiaries into managed care plans (1915(b)(1)); (b)
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Section
1915(b)/1915(c)
Concurrent
Waivers

Section 1915(c)

Section 1915(g)(1)

Section 1915(i)

AAA
Abuse

Abuse Registry

employ a central enrollment broker (1915(b)(2)); (c) use cost savings to
provide additional services to enrollees (1915(b)(3); and/or, (d) limit the
number of providers through selective contracting (1915(b)(4)). Waivers
granted under the provisions of 1915(b) may be effective for a period of
two years and may be renewed for subsequent two-year periods.
Simultaneous use of the §1915(b) and §1915(c) waiver authorities may
be used to integrate delivery of home and community-based services
with State plan services in order to provide a coordinated array of
services to beneficiaries. States also use the §1915(b) authority to limit
free of choice of provider while employing the §1915(c) authority to
provide the home and community-based services. A state can
implement a §1915(b)/§1915(c) concurrent waiver as long as all
Federal requirements for both waiver programs are met. Therefore,
when submitting applications for concurrent §1915(b)/(c) programs, a
state must submit a separate application for each waiver type and
satisfy all of the applicable requirements under each authority.
The provision of the Social Security Act that authorizes the Secretary of
HHS to grant waivers of certain Medicaid statutory requirements so that
a state may furnish home and community services to Medicaid
beneficiaries who need a level of institutional care that is provided in a
hospital, nursing facility or Intermediate Care Facility for Individuals
with Intellectual Disabilities (ICF/IID).
A provision of the Social Security Act that permits a state to furnish
“targeted case management services” under the State plan to groups of
Medicaid beneficiaries specified by the state on a statewide or less than
statewide basis. See also “targeted case management.”
A provision of the Social Security Act enacted through the Deficit
Reduction Act of 2005 (DRA), that permits a state to furnish home and
community services under the State plan without regard to whether
Medicaid beneficiaries require an institutional level of care.
See Area Agency on Aging
The infliction of injury, unreasonable confinement, intimidation,
punishment, mental anguish, sexual abuse or exploitation on an
individual. Types of abuse include (but are not necessarily limited to):
(a) physical abuse (a physical act by an individual that may cause
physical injury to another individual); (b) psychological abuse (an act,
other than verbal, that may inflict emotional harm, invoke fear and/or
humiliate, intimidate, degrade or demean an individual); (c) sexual
abuse (an act or attempted act such as rape, incest, sexual molestation,
sexual exploitation or sexual harassment and/or inappropriate or
unwanted touching of an individual by another); and, (d) verbal abuse
(using words to threaten, coerce, intimidate, degrade, demean, harass or
humiliate an individual).
An official, state-maintained listing of individuals who have been
convicted of abuse or found through a civil/administrative procedure to
have committed abuse against a person.
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Accreditation

Act
Activities of Daily
Living (ADL)

ADL
Administration

Administrative
FFP

Aged
Agency Provider

Agency with
Choice (Model)

ALOS

An evaluative process through which a provider organization undergoes
an examination of its policies, procedures and performance by a
nationally recognized external organization ("accrediting body") to
determine that the provider meets predetermined criteria.
The Federal Social Security Act (42 U.S.C. §1396 et seq.)
Basic personal everyday activities that include bathing, dressing,
transferring (e.g., from bed to chair), toileting, mobility and eating. The
extent to which a person requires assistance to perform one or more
ADLs often is a level of care criterion.
See Activities of Daily Living
Necessary activities that are undertaken by a state to implement and
operate its Medicaid program, including complying with Federal
administrative requirements. Administrative activities include but are
not limited to the payment of provider billings, utilization management,
and the operation of an MMIS.
The Federal share of the expenses for performing activities that are
necessary for the proper and efficient administration of the State plan.
Federal Financial Participation (FFP) rates for administrative activities
vary by function, not by state. The general FFP administrative rate is
50%. Some administrative functions qualify for enhanced FFP
administrative rates of 75 percent or more as specified in 42 CFR
§433.15. (e.g., survey and certification, fraud control units).
As provided in §1905(a)(iii) of the Act, persons aged 65 and older.
A public or private organization/entity that holds a Medicaid provider
agreement and furnishes services to waiver participants using its own
employees or subcontractors.
One of the two Employer Authority options that may be made available
to waiver participants who direct some or all of their services. Also
known as the “co- employment option,” an arrangement wherein an
organization (a co-employment agency) assumes responsibility for: (a)
employing and paying workers who have been selected by waiver
participants to provide services to them; (b) reimbursing allowable
services; (c) withholding, filing and paying Federal, state and local
income and employment taxes; and (d) sometimes providing other
supports to the participant. Under this model, the participant acts as the
“Managing Employer” and is responsible for hiring, managing, and
possibly dismissing the worker. The Agency with Choice model can
enable participants to exercise choice and control over services while
relieving them of the burden of carrying out financial matters and other
legal responsibilities associated with the employment of workers.
Under this model, the co-employment agency is considered the common
law employer of workers who are selected/hired by the waiver
participant.
See Average Length of Stay

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Amendment

A formal request submitted by a state to modify an approved waiver.

Amount (of
services)
Annual Waiver
Report
Approved Waiver

A term that refers to the total volume of services (measured in units or
dollars) that are furnished to an individual.
See CMS-372(S)

Area Agency on
Aging (AAA)

BBA-97

Agencies established in each state under the provisions of the Federal
Older Americans Act to meet the needs of persons aged 60 and over in
local communities.
One or more processes that are used to obtain information about an
individual, including his/her condition, personal goals and preferences,
functional limitations, health status and other factors that are relevant to
the authorization and provision of services. Assessment information
supports the determination that an individual requires waiver services as
well as the development of the service plan.
An assisted living facility provides residents personal care and other
assistance as needed with ADLs and IADLs but does not provide roundthe-clock skilled nursing services. Assisted living facilities generally
provide less intensive care than nursing facilities and emphasize resident
privacy and choice.
The commitment by a state to operate a HCBS waiver program in
accordance with statutory requirements. Approval of a new waiver is
contingent on CMS determining that the program’s design will result in
meeting the assurances contained in 42 CFR §441.302. Renewal of a
waiver is contingent on CMS finding that a waiver has been operated in
accordance with the assurances and other Federal requirements.
The average number of days during a waiver year that a waiver
participant is served on a waiver.
Provision for alternative arrangements for the delivery of services that
are critical to participant well-being in the event that the provider
responsible for furnishing the services fails or is unable to deliver them.
Balanced Budget Act of 1997 (P.L. 105-33)

Beneficiary

An individual who is eligible for and enrolled in the Medicaid program.

Billing

The request for payment by a provider from the state for services
rendered.
The participant direction opportunity through which a waiver participant
exercises choice and control over a specified amount of waiver funds
(participant-directed budget). Under the budget authority, the participant
has decision-making authority regarding who will provide a service,
when the service will be provided, and how the service will be provided
consistent with the waiver’s service specifications and other
requirements. The participant has the authority to make changes in the
distribution of funds among the waiver services included in the
participant-directed budget. Budget changes and the service plan need to
be synchronized.

Assessment

Assisted Living

Assurance

Average Length of
Stay (ALOS)
Backup

Budget Authority

A waiver that has been approved by CMS and is in effect.

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Bundled Service

Buy-in
Capitation
Payment

Caregiver

Case Management

Categorical
Eligibility

Categorically
Needy

Certified Public
Expenditure
(CPE)

A waiver service that encompasses two or more discrete services that
are not closely related. When a state proposes to cover a bundled
service, it needs to demonstrate that such bundling will result in more
efficient and economical delivery of services and ensure that waiver
participants enjoy free choice of provider.
See Medicaid Buy-In
A method of payment for an array of services wherein a single fixed
payment is made periodically (usually monthly) to a provider (e.g., a
managed care entity) on behalf of each beneficiary who is enrolled with
the provider and for whom the provider is obligated to furnish the
services included in the array. The state makes the payment regardless
of the actual number or nature of the services provided. Capitation
payment methods are commonly employed in managed care
arrangements.
A person who helps care for someone who is ill, has a disability, and/or
has functional limitations and requires assistance. Informal caregivers
are relatives, friends or others who volunteer their help. Paid caregivers
provide services in exchange for payment for the services rendered.
A set of activities that are undertaken to ensure that the waiver
participant receives appropriate and necessary services. Under a HCBS
waiver, these activities may include (but are not necessarily limited to)
assessment, service plan development, service plan implementation and
service monitoring as well as assistance in accessing waiver, State plan,
and other non-Medicaid services and resources. Case management
sometimes is referred to as “service coordination,” or “support
coordination.”
A phrase that describes Medicaid’s policy of restricting eligibility to
individuals in certain specified groups or categories, such as children,
older persons (the aged), or individuals with disabilities (the disabled).
In order to be determined eligible for Medicaid, individuals who fall
into approved, statutorily recognized categories must also satisfy
financial eligibility requirements, including income and, in most cases,
resource tests imposed by the state in which they reside.
A phrase that describes certain groups of Medicaid beneficiaries who
qualify for the basic mandatory package of Medicaid benefits. There are
mandatory categorically needy groups that states must cover, such as
pregnant people and infants with incomes at or below 133 percent of
the Federal Poverty Level (FPL). There are also optional categorically
needy groups that states may elect to cover at their option, such as
pregnant people and infants with incomes above 133 percent and up to
185 percent of the FPL. Unlike the medically needy, categorically needy
individuals do not spenddown to qualify for Medicaid (except in 209(b)
States).
The expenditure by a state or local public agency to provide or purchase
services that qualify for Medicaid Federal financial participation. The
public agency certifies these expenditures to the Medicaid agency which
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Claim

Centers for
Medicare &
Medicaid Services
(CMS)
Center for
Medicaid and
CHIP Services
(CMCS)
Certification
CFR

Chore Services
Chronic Illness

Chronic Mental
Illness
CMCS

(a) includes them in its claim for FFP and (b) pays the certifying public
agency the Federal share of allowable expenditures.
The formal request by the state for Federal financial participation in the
costs of services furnished to beneficiaries and expenses for the
administrative activities that the state has incurred to operate its
Medicaid program.
The agency in the Department of Health and Human Services that is
responsible for Federal administration of the Medicaid, Medicare, and
Children’s Health Insurance Program (CHIP) programs. CMS was
formerly known as the Health Care Financing Administration (HCFA).
The component within CMS that is responsible for Federal
administration of the Medicaid, the Children’s Health Insurance
Program (CHIP) program, and the Basic Health Program.
The result of formal processes that are undertaken by a state to verify
that a provider meets regulatory standards for the delivery of a service.
Code of Federal Regulations. The CFR contains the regulations that
have been officially adopted by Federal agencies. Federal regulations
that govern the Medicaid program are contained in 42 CFR §430 et seq.
Assistance with household tasks such as home repairs, yard work, and
heavy housecleaning.
A long-term or permanent illness (e.g., diabetes, arthritis) that may
result in some type of disability for which assistance may be required on
a continuing basis.
See Serious Mental Illness
See Center for Medicaid and CHIP Services

CMS

See Centers for Medicare & Medicaid Services

CMS-372(S)

The annual report that a state must submit to CMS following the
completion of each waiver year that details: (a) the number of
unduplicated individuals who participated in a waiver during the waiver
year; (b) the unduplicated number of persons who utilized each waiver
service and the amount of funds expended for each service; (c)
expenditures for Medicaid State plan services on behalf of waiver
participants; and, (d) information concerning assuring the health and
welfare of waiver participants. The information submitted via the CMS372(S) provides evidence of the waiver’s cost-neutrality on an ongoing
basis.
The unique numeric identifier assigned by CMS to each HCBS waiver
program.
See Agency with Choice model.

CMS Waiver
Number
Co-Employment
Agency
Co-Employer
Co-Insurance

See Agency with Choice model
A fixed percentage of the cost of a specific service that must be paid by
the beneficiary. Under Medicaid, co-insurance amounts may not
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Common Law
Employer

Common Law
Employer
(Option)

Community
Transition
Comparability

Complaint

Computable
Waiver Costs

Continuous
Improvement
Co-Payment

Cost Neutrality

generally exceed 10% of the cost of the service. Co-insurance is
distinguished from co-payment where a fixed dollar amount is charged
to a beneficiary for a service.
A common law employer-employee relationship generally exists when
the person for whom services are performed has the authority to control
and direct the individual who performs the services, not only as to the
result to be accomplished but also as to the detail and means by which
that result is accomplished.
One of the two Employer Authority options that may be made available
to waiver participants who direct some or all of their services. Under
this option, the waiver participant is the common law employer of
workers who furnish services and supports and assumes all
responsibilities associated with being the employer of such workers.
When this option is selected, a Fiscal/Employer Agent performs
employer-related tasks on behalf of the participant but does not serve as
the common law employer of participant-hired workers.
Activities that are undertaken to assist an institutionalized person to
return to the community or facilitate a person served in a congregate
living arrangement in the community to reside in a private residence.
The requirement contained in §1902(a)(10)(B) of the Act that a state
must offer services in the same amount, duration, and scope to
individuals within categorically or medically needy groups covered
under its State plan and that services available to any categorically
needy recipient cannot be less than those available to a medically need
recipient. A state must request a waiver of this provision in order to
operate an HCBS waiver.
The formal expression of dissatisfaction by a participant with the
provision of a waiver service or the performance of an entity in
conducting other activities associated with the operation of a waiver.
The amount expended by the state for waiver services net of
adjustments for offsets such as participant post-eligibility treatment of
income financial liability and cost-sharing. Only computable waiver
costs are eligible for Federal financial participation.
The utilization of systematically complied data and quality information
derived from discovery activities in order to engage in actions to secure
better performance in the operation of a waiver.
A fixed dollar amount that a Medicaid beneficiary is expected to pay at
the time of receiving a specified covered service from a provider. Copayments, like other forms of Medicaid beneficiary cost-sharing (e.g.,
deductibles, coinsurance), may only be imposed by a state upon certain
groups of beneficiaries, only with respect to certain services, and only in
amounts as specified in Federal law.
The requirement that an HCBS waiver must be designed and operated
so that the average cost per unduplicated participant of furnishing
waiver services and other Medicaid benefits is no greater than the
average cost per unduplicated individual of furnishing institutional
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Cost-Sharing

Countable Income
or Resources

CPE
Criminal History/
Background
Investigation

Critical Incident
(Event)

DAC
Deductible

Deemed Status

Deficit Reduction
Act of 2005

Design
Developmental
Disability

services and other Medicaid benefits to institutionalized persons at the
same level of care. Cost neutrality must be demonstrated prospectively
in order for a new waiver or a waiver renewal to be approved. It also
must be verified each year that the waiver is in effect (by the submission
of the annual CMS 372(S) report).
The required out-of-pocket payment that an individual must pay for a
covered service. Cost sharing generally takes one of three forms: coinsurance, co-payments or deductibles.
The amount of income or resources that is left after the application of all
financial eligibility methodologies and that is compared to the
applicable income or resource standard for the purpose of determining
Medicaid eligibility.
See Certified Public Expenditures
A process that is undertaken to determine whether a person who would
provide services has been convicted of a crime. Requirements for
conducting criminal history/background investigations are typically
established under state law/regulations. Under such requirements, a
human services agency or health care provider must conduct an
investigation prior to hiring a person or permitting an employee to
furnish services directly to individuals and, in some cases, may prohibit
the employment of individuals who have been convicted of specified
crimes.
An alleged, suspected, or actual occurrence of: (a) abuse (including
physical, sexual, verbal and psychological abuse); (b) mistreatment or
neglect; (c) exploitation; (d) serious injury; (e) death other than by
natural causes; (f) other events that cause harm to an individual; and, (g)
events that serve as indicators of risk to participant health and welfare
such as hospitalizations, medication errors, use of restraints or
behavioral interventions.
See Disabled Adult Child
A specified dollar amount that the beneficiary must incur before
Medicaid will pay for services. The amount of the deductible must
comply with Medicaid federal law.
The use of the findings of a private accreditation organization, in whole
or in part, to supplement or substitute for state verification of provider
quality standards.
The federal legislation (P.L. 109-171) that made numerous changes to
federal Medicaid law, including provisions that affect beneficiary cost
sharing and the permit the coverage of certain home and community
services under the state plan.
The process of structuring an HCBS waiver (including its benefits and
operational processes) in order to achieve its intended purpose(s).
As provided in The Developmental Disabilities Assistance and Bill of
Rights Act of 2000 (P.L.106-402 – 42 USC §15002(8)(A) &(B)):

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DHCBSO
Disability

Disabled

Disabled Adult
Child (DAC)

(A) IN GENERAL.—The term ‘‘developmental disability’’ means a
severe, chronic disability of an individual that— (i) is attributable to a
mental or physical impairment or combination of mental and physical
impairments; (ii) is manifested before the individual attains age 22; (iii)
is likely to continue indefinitely; (iv) results in substantial functional
limitations in 3 or more of the following areas of major life activity: (I)
Self-care. (II) Receptive and expressive language. (III) Learning. (IV)
Mobility. (V) Self-direction. (VI) Capacity for independent living. (VII)
Economic self-sufficiency; and (v) reflects the individual’s need for a
combination and sequence of special, interdisciplinary, or generic
services, individualized supports, or other forms of assistance that are of
lifelong or extended duration and are individually planned and
coordinated.
(B) INFANTS AND YOUNG CHILDREN.—An individual from birth
to age 9, inclusive, who has a substantial developmental delay or
specific congenital or acquired condition, may be considered to have a
developmental dis ability without meeting 3 or more of the criteria
described in clauses (i) through (v) of subparagraph (A) if the
individual, without services and supports, has a high prob ability of
meeting those criteria later in life.
[N.B., The foregoing definition is not the same as the Medicaid
specification of individuals who may receive ICF/IID services.
ICF/IID services are furnished to persons with intellectual disability
and other related conditions (see below). When a waiver targets
individual with developmental disabilities, a state should define its use
of the term “developmental disability.”]
See Division of HCBS Operations and Oversight
For Social Security purposes and as provided in section 1614(a)(3) of
the Act, disability means the inability of a person aged 18 or older to
engage in substantial gainful activity (work) by reason of any medically
determinable physical or mental condition that can be expected to result
in death or to last for a continuous period of not less than 12 months. In
the case of children (persons aged 17 and younger), the child must have
a physical or mental condition that results in marked and severe
functional limitations. The condition also must be expected to result in
death or to last for a continuous period of not less than 12 months.
As provided in section 1905(a)(vii) of the Act, for Medicaid purposes
the term “disabled” means persons under the age of 65 who have been
determined to have a disability for Social Security purposes (as provided
in section 1614(a)(3) of the Act). A 209(b) state may use a more
restrictive definition for “disability.”
A SSDI beneficiary whose disability began before age 22. For an adult
with disabilities to become eligible for this benefit, one of his or her
parents must: (a) be receiving Social Security retirement or disability
benefits or (b) must have died and have worked long enough under
Social Security. These benefits are also payable to an adult who
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Instructions: Version 3.7 HCBS Waiver Application

received dependents benefits on a parent’s Social Security earnings
record prior to age 18, if he or she is disabled at age 18.
Discovery
Engaging in activities to collect data about the conduct of processes, the
delivery of services, and direct participant experiences in order to assess
the ongoing implementation of a waiver, identifying both concerns as
well as other opportunities for improvement. Examples of discovery
activities include, but are not limited to, monitoring, complaint systems,
incident management systems, and regular systematic reviews of critical
processes such as participant-centered planning and level of care
determinations. Discovery activities are usually designed to identify
problems that may require remediation and sometimes lead to systemic
changes/improvements.
Disregard
An informal term for the state’s methodology for counting or excluding
income and resources in determining Medicaid eligibility. For certain
eligibility categories, such as poverty-related children or working
disabled adults, states may disregard – that is, not count – certain
income or resources in determining whether the individual meets its
Medicaid income or resource standards. The effect of an income or
resource disregard is to enable an individual to qualify for Medicaid
even if his or her gross income or resources exceed the state eligibility
standard.
Division of HCBS The unit within MCOG that serves as the first point-of-contact for the
Operations and
states concerning the HCBS waiver program. DHCBSO is also tasked
Oversight
with oversight of the waivers and engaging in ongoing dialogue with the
(DHCBSO)
state concerning waiver operations and performance. DHCBSO shares
responsibilities with DLTSS for reviewing waiver applications and
requests for amendments and providing technical assistance to states
concerning the design and operation of waivers.
Division of LongThe unit within MBHPG that has direct line responsibility for the HCBS
Term Services and waiver program. DLTSS shares responsibilities with DHCBSO for
Supports (DLTSS) reviewing waiver applications and requests for amendments and
providing technical assistance to states concerning the design and
operation of waivers.
DLTSS
See Division of Long-Term Services and Supports
Donation

DRA
Drug Used as
Restraint

The transfer of funds from a provider or provider organization to the
state to provide the non-federal share of Medicaid expenditures.
Allowable donations are termed “bona fide donations,” as defined in 42
CFR § 433.54. Other donations are generally not allowable.
See Deficit Reduction Act of 2005
Any drug that: (1) is administered to manage an individual’s behavior in
a way that reduces the safety risk to the individual or others; (2) has the
temporary effect of restricting the individual’s freedom of movement;
and (3) is not a standard treatment for the individual’s medical or
psychiatric condition.

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Dual Eligible (Full
Benefit)
Duration (of
services)

Early and
Periodic
Screening,
Diagnosis and
Treatment
(EPSDT)

Eligibility
Determination

Eligibility Group

Emergency
Backup
Employer
Authority

Enhanced
Payment
Enrollment

Entrance

An individual who is eligible for both Medicare Parts A and B and for
full Medicaid coverage, including the payment of the person’s Medicare
premium, deductibles, and co-insurance.
The length of time that a service will be provided. A limit on the
duration of services means that the service will no longer be provided
after a specified period of time or, after a specified period of time, the
necessity for the service is subject to review and reauthorization.
Medicaid’s comprehensive child health program for individuals under
the age of 21. EPSDT is authorized under section 1905(r) of the Act
and includes the performance of periodic screening of children,
including vision, dental, and hearing services. Section 1905(r)(5) of the
Act requires that any medically necessary health care service that is
listed in section1905(a) of the Act be provided to an EPSDT beneficiary
even if the service has not been specifically included in State plan.
Federal EPSDT regulations are located in 42 CFR § 441.50 et seq.
Refers to the processes that are employed to ascertain whether an
individual meets the requirements specified in the state plan to receive
Medicaid benefits. Such requirements include the determination of
whether a person is a member of an eligibility group specified in the
state plan and meets the applicable income and resource standards
associated with the group. Eligibility determination must be performed
by the Medicaid agency or another agency specified in 42 CFR
§ 431.10(c) with which the Medicaid agency has an agreement as
provided in 42 CFR § 431.10(d).
Any one of the distinct groups of individuals identified in §1905(a) of
the Act or elsewhere in the Act to which a state must or may furnish
Medicaid benefits.
See Backup.
The participant direction opportunity by which the waiver participant
exercises choice and control over individuals who furnish waiver
services authorized in the service plan. Under the employer authority,
the participant may function as the co- employer (managing employer)
or the common law employer of workers who furnish direct services and
supports to the participant.
See Supplemental Payment
An informal term used to describe the processes that result in the entry
of an individual into a HCBS waiver. Synonymous with the term
“entrance.”
The result of completing all processes that must be completed in order
for an individual to begin to receive waiver services. A person may start
to receive waiver services when: (a) the person has been determined to
meet applicable Medicaid eligibility criteria; (b) there has been a
determination that the person is member of a target group that is
included in the waiver; (c) there has been a determination that the
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EPSDT
Evaluation
Evidence
Evidence-Based

Exploitation

Extended State
Plan Service
Extension

Fair Hearing

FBR
Feasible
Alternatives

Federal Benefit
Rate (FBR)

person requires a level of care specified for the waiver; (d) the person
has exercised freedom of choice and has elected to receive waiver
instead of institutional services; and, (e) a service plan has been
developed that includes one or more waiver services. FFP is not
available for the costs of services furnished to an individual until all of
these steps have been completed. Entrance may be expedited by the
preparation of an interim service plan.
See Early and Periodic Screening, Diagnosis and Treatment
The processes that are undertaken to determine whether an individual
requires the level of care specified for the waiver.
Data or facts that support determining whether something is true or not
true.
A broad term that is used to describe methods or practices that have
been demonstrated (through formal research and systematic analysis of
data) to secure specified outcomes efficiently and efficaciously.
An act of depriving, defrauding or otherwise obtaining the personal
property of an individual by taking advantage of a person’s disability or
impairment.
The coverage in a waiver of a state plan service for the purpose of
furnishing the state plan service in an amount, frequency or duration that
is greater than allowed under the state plan.
The approved continued operation of an HCBS waiver beyond its
expiration date until a determination is made by CMS whether to renew
the waiver. An extension must be requested by the state and approved
by CMS and is limited to a single 90- day period.
The administrative procedure established in section 1902(a)(3) of the
Act and further specified in 42 CFR Subpart E (42 CFR §431.200
through §431.246) that affords individuals the statutory right and
opportunity to appeal adverse decisions regarding Medicaid eligibility
or benefits to an independent arbiter. An individual has the opportunity
to request a Fair Hearing when denied eligibility, when eligibility is
terminated, or when denied a covered benefit or service.
See Federal Benefit Rate
The types of waiver services that may be available to an individual who
is a candidate for entrance to the waiver (e.g., meets requirements for
entrance such as the need for a level of care specified in the waiver).
During the waiver entrance process, a person must be informed of the
feasible alternatives under the waiver so that the person may exercise
freedom of choice between waiver and institutional services.
The maximum federal monthly payment that is paid to an SSI recipient
or a couple who has no other countable income. The amount of the FBR
is updated annually to take into account inflation by applying a Cost of
Living Adjustment (COLA). The new COLA-adjusted FBR takes effect
on January 1 of each calendar year.

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Federal Financial
Participation
(FFP)

FFP

The technical term for federal Medicaid matching funds paid to states
for allowable expenditures for Medicaid services or administrative
costs. Except in certain circumstances, states receive FFP for service
expenditures at different rates (FMAPs), depending on each state’s per
capita incomes. FFP for Medicaid administrative expenditures (see
Administrative FFP) also varies in its rate, depending upon the type of
administrative function, as provided in section1903(a)(2) of the Act.
The federal law that authorizes taxes on the wages of employed persons
to provide for contributions to the Federal Old Age, Survivors and
Disability Insurance (OASDI – Social Security) and Medicare Health
Insurance (Part A) programs. Covered workers and their employers pay
FICA taxes in equal amounts.
The statutory term for the federal Medicaid matching rate for medical
assistance furnished under the State plan – i.e., the share of the costs of
Medicaid services that the federal government bears. In most cases,
FMAP varies from 50 to 83 percent, depending upon a state’s per capita
income. FMAP rates are re- calculated annually under the formula set
forth in section 1903(b) of the Act.
The federal government’s working definition of poverty that is used as
the reference point for the income standard for Medicaid eligibility for
certain groups of beneficiaries. The FPL is adjusted annually for
inflation and is published by the Department of Health and Human
Services in the form of Poverty Level Guidelines by household size.
The official federal daily publication that contains proposed rules, final
regulations and notices of federal agencies and organizations as well as
Executive Orders and other Presidential documents. The Federal
Register is cited by volume number and page number(s).
The Federal Employment Tax Act authorizes the Internal Revenue
Service to collect a federal employer tax used to fund state workforce
agencies. Employers pay this tax annually by filing IRS Form 940.
FUTA covers the costs of administering the Unemployment Insurance
and Job Service programs in all states. In addition, FUTA pays one-half
of the cost of extended unemployment benefits (during periods of high
unemployment) and provides for a fund from which states may borrow,
if necessary, to pay benefits.
A method of paying providers for services rendered to individuals.
Under a fee- for-service system, the provider is paid for each discrete
service rendered to an individual.
See Federal Financial Participation

FICA

See Federal Insurance Contribution Act.

Financial
Accountability

The assurance by a state that its claims for federal financial participation
in the costs of waiver services are based on state payments for waiver
services that have been rendered to waiver participants, authorized in
the service plan, and properly billed by qualified waiver providers in
accordance with the approved waiver.

Federal Insurance
Contributions Act
(FICA)

Federal Medical
Assistance
Percentage
(FMAP)

Federal Poverty
Level (FPL)

Federal Register
(FR)

Federal
Unemployment
Tax Act (FUTA)

Fee for Service

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Financial
Eligibility

Fiscal/Employer
Agent
FMAP

In order to qualify for Medicaid, an individual must meet both
categorical (e.g., have a disability) and financial eligibility requirements.
Financial eligibility requirements vary state-to-state and by eligibility
category. These requirements generally include limits on the amount of
countable income (income standard) and the amount of countable
resources (resource standard) an individual is allowed to have in order
to qualify for coverage.
A support that is provided to waiver participants who direct some or all
of their waiver services. This support may be furnished as a waiver
service or conducted as an administrative activity. When used in
conjunction with employer authority, this support includes (but is not
necessarily limited to) operating a payroll service for participant
employed workers and making required payroll withholdings. When
used in conjunction with budget authority, this support includes (but is
not necessarily limited to) paying invoices for waiver goods and
services and tracking expenditures against the participant-directed
budget.
The entity that processes or pays Medicaid vendor billings under
contract with the Medicaid agency and that meets the requirements
contained in 42 CFR §434.10. Sometimes referred to as a “financial
intermediary.”
A term used by the IRS for entities that perform tax withholding for
employers.
See Federal Medical Assistance Percentage

FPL

See Federal Poverty Level

See Federal Register

Fraud and Abuse

In the context of provider billings for Medicaid services, fraud means an
intentional deception or misrepresentation made by a person with the
knowledge that the deception could result in some unauthorized benefit
to himself or some other person. It includes any act that constitutes
fraud under applicable Federal or State law. Abuse means provider
practices that are inconsistent with sound fiscal, business, or medical
practices, and result in an unnecessary cost to the Medicaid program, or
in reimbursement for services that are not medically necessary or that
fail to meet professionally recognized standards for health care. It also
includes recipient practices that result in unnecessary costs to the
Medicaid program. State plan requirements concerning fraud detection
and investigation are located in 42 CFR §455.12 et seq.
As specified in section 1902(a)(23) of the Act and 42 CFR § 431.51,
the right of a Medicaid beneficiary to obtain Medicaid services from
any institution, agency, pharmacy, person, or organization that is (a)
qualified to furnish the services; and (b) willing to furnish them to the
beneficiary. Free choice of provider may be limited under a waiver
granted under section 1915(b) of the Act. Section 1915(c) of the Act
(the statute authorizing the HCBS waiver program) does not grant the

Financial
Management
Services

Fiscal Agent

Free Choice of
Provider

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Instructions: Version 3.7 HCBS Waiver Application

Secretary the authority to waive section1902(a)(23) of the Act.
Freedom of
Choice

Frequency (of
services)
FUTA

The right afforded an individual who is determined to be likely to
require a level of care specified in a waiver to choose either institutional
or home and community-based services, as provided in section
1915(c)(2)(C) of the Act and in 42 CFR § 441.302(d).
How often a service will be furnished to a beneficiary.
See Federal Unemployment Tax Act

GAGAS

See Generally Accepted Government Auditing Standards

Generally
Accepted
Government
Auditing
Standards
(GAGAS)

Standards for financial audits issued by the Comptroller General of the
United States through the U.S. General Accountability Office. The
standards and guidance apply to audits and attestation engagements of
government entities, programs, activities, and functions, and of
government assistance administered by contractors, nonprofit entities,
and other nongovernmental entities. A number of statutes and other
mandates require that auditors follow GAGAS. The Single Audit Act
Amendments of 1996 (Public Law 104-156) require that GAGAS be
followed in audits of state and local governments and nonprofit entities
that receive federal awards. The use of GAGAS is also required by
Office of Management and Budget (OMB) Circular A-133, Audits of
States, Local Governments, and Non-Profit Organizations, which
provides the government- wide guidelines and policies on performing
audits to comply with the Single Audit Act.
A formal, beneficiary complaint about the way that a service provider is
furnishing a Medicaid service or about the conduct of a waiver
administrative process.
Services that are provided in order to assist an individual to acquire a
variety of skills, including self-help, socialization and adaptive skills.
Habilitation is aimed at raising the level of physical, mental, and social
functioning of an individual. Habilitation is contrasted to rehabilitation
which involves the restoration of function that a person has lost.
Home and Community-Based Services

Grievance

Habilitation

HCBS
Health Insurance
Portability and
Accountability Act
of 1996 (HIPAA)

HHS

The federal law (P.L. 104-191) that requires (among its other
provisions) that each state’s Medicaid management information system
(MMIS) have the capacity to exchange data with the Medicare program
and that contains “Administrative Simplification” provisions that
require state Medicaid programs to use standard, national codes for
electronic transactions related to the processing of health claims.
HIPAA also mandates certain standards and practices with regard to the
privacy of consumer health information.
U.S. Department of Health and Human Services

HIPAA

See Health Insurance Portability and Accountability Act of 1996

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Home Health Aide A person who, under the supervision of a home health, assists elderly, ill
or a person with a disability with household chores, bathing, personal
care, and other daily living needs.
Home Health
As specified in 42 CFR §440.70, the provision of part-time or
Services
intermittent nursing care and home health aide services and, at a state’s
option, physical therapy, occupational therapy, speech pathology and
audiology services, medical equipment, medical supplies, and
appliances that are provided to Medicaid beneficiaries in their place of
residence. Home health services are a mandatory Medicaid benefit.
Home health services must be ordered by a physician under a plan of
care that the physician reviews at least every sixty days.
Homemaker
The performance of general household tasks (e.g., meal preparation and
Services
routine household care) provided by a qualified homemaker, when the
individual regularly responsible for these activities is temporarily absent
or unable to manage the home and care for him or herself or others in
the home.
IADL
See Instrumental Activities of Daily Living
IBA

See Individual Budget Amount

ICF/IID
IDEA

See Intermediate Care Facility for Individuals with Intellectual
Disabilities
See Individuals with Disabilities Education Improvement Act of 2004

IGT

See Intergovernmental Transfer

IMD

See Institutions for Mental Disease

Income Standard

The maximum amount of countable income that a person can have and
still be financially eligible for Medicaid.
A key quality characteristic that is measured, over time, in order to
assess the performance, processes, and outcomes of service delivery
components.
As used in the waiver application, the term “individual budget amount”
means a prospectively determined amount of funds that the state makes
available for the provision of waiver services to a participant. The IBA
may encompass all waiver services or a subset of waiver services. An
IBA may serve as the basis for but is not necessarily synonymous with
the term “participant-directed budget” when a waiver provides for the
Budget Authority participant direction opportunity.
A limitation on the entrance of individuals to a waiver that is based on
the comparison of the expected costs of HCBS waiver and state plan
services to the expected costs of institutional and State plan services that
the person would receive in lieu of participation in the waiver. When a
state adopts an individual cost limit, the state denies entrance to the
waiver when the expected cost of HCBS waiver and State plan services
required by an individual exceeds the limit established by the state.

Indicator

Individual Budget
Amount (IBA)

Individual Cost
Limit

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Individual Risk
Agreement
(Contract)

Individuals with
Disabilities
Education
Improvement Act
of 2004 (IDEA)
Information and
Assistance in
Support of
Participant
Direction

Interagency
Agreement

Institution

Institutions for
Mental Disease
(IMD)

An agreement that outlines the risks and benefits to the participant of a
particular course of action that might involve risk to the participant, the
conditions under which the participant assumes responsibility for the
agreed upon course of action, and the accountability trail for the
decisions that are made. A risk agreement permits individuals to assume
responsibility for their choices personally, through surrogate decision
makers, or through planning team consensus.
The federal law (P.L. 108-446; 20 USC §1400 et seq.) that ensures “that
all children with disabilities have available to them a free appropriate
public education that emphasizes special education and related services
designed to meet their unique needs and prepare them for further
education, employment, and independent living.”
Activities that are undertaken to assist a waiver participant to direct and
manage his/her waiver services. Such activities might include assisting a
participant in carrying out employer responsibilities under the employer
authority or locating sources of waiver goods and services and
managing the participant-directed budget. This support is furnished by
individuals or entities that work on behalf of and under the direction of
the person. These activities may be provided as a distinct waiver
service, in conjunction with the provision of case management, as an
administrative activity or using a combination of delivery methods. Also
sometimes known as “supports brokerage” or “personal agent.”
A formal document that sets forth the responsibilities that are assumed
by two or more governmental agencies in their pursuit of common goals
and objectives. In the context of the HCBS waiver, the Medicaid agency
may enter into an interagency agreement (or, alternatively, a
Memorandum of Understanding or MOU) with another state agency to
operate a waiver, provided that the Medicaid agency retains ultimate
authority over the administration of the waiver.
In the context of the waiver application, a hospital, nursing facility or
ICF/IID for which the state makes Medicaid payment under the state
plan.
As defined in 42 CFR § 435.1009, an IMD is a public or private facility
that has more than 16 beds and is primarily engaged in providing
diagnosis, treatment, or care of persons with mental diseases (disorders).
This includes not just public or private hospitals for individuals with
mental illness but also nursing homes or other long-term care facilities
that primarily serve such individuals. As provided in 42 CFR §
435.1008, federal Medicaid matching funds are not available for the
costs of any Medicaid services furnished to individuals under 65 years
of age who reside in an IMD except that, per 42 CFR § 440.160, a state
may provide optional inpatient coverage for individuals under age 21 in
accredited psychiatric facilities. Per 42 CFR § 440.140, a state may
provide optional coverage for individuals aged 65 and older in hospitals
or nursing facilities that are IMDs. A facility that serves fewer than 17
individuals with mental disorders is not considered to be an IMD.
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Instrumental
Activities of Daily
Living (IADL)

Activities related to independent living, including preparing meals,
managing money, shopping for groceries or personal items, performing
light or heavy housework, and communication. The extent to which a
person requires assistance in performing IADLs is often assessed in
conjunction with the evaluation of level of care.
Intellectual
A condition/disability that is manifested by (1) significant sub-average
Disability
intellectual functioning as measured on a standardized intelligence test;
(2) significant deficits in adaptive behavior/functioning (e.g., daily
living, communication and social skills); and (3) on-set during the
developmental period of life (prior to age 18).
Intergovernmental The transfer of non-federal public funds from a local government or
Transfer (IGT)
another state agency to the Medicaid agency for the purpose of
providing the non-federal share of a Medicaid expenditure in order to
draw down federal Medicaid matching funds.
Intermediate Care A public or private facility that provides health and habilitation services
Facility for
to individuals with intellectual disability or related conditions (e.g.,
Individuals with
cerebral palsy). The ICF/IID benefit is an optional Medicaid service that
Intellectual
is authorized in §1905(d) of the Act. ICFs/IID facilities have four or
Disabilities
more beds and must provide active treatment to their residents.
(ICF/IID)
IRS
Internal Revenue Service
Katie Beckett
Option

Keys Amendment

Legal
Representative
Legally
Responsible
Individual

The popular name for the Medicaid optional eligibility group under
section 1902(e)(3) of the Act that permits a state to extend Medicaid
eligibility to children with disabilities or chronic conditions under the
age of 19 who require the level of care provided in a hospital, nursing
facility, or ICF/IID but who can be cared for at home and would not
otherwise qualify for Medicaid unless institutionalized. This option is
sometimes called the TEFRA 134 option. Federal regulations
concerning this optional eligibility group are located in 42 CFR §
435.225.
The popular name for the requirement contained in section 1616(e) of
the Act which requires that each state establish, maintain, and insure the
enforcement of standards for any category of institutions, foster homes,
or group living arrangements in which a significant number of SSI
recipients resides or is likely to reside. The standards must be: (a)
appropriate to the needs of residents and the character of the facilities
involved and (b) govern such matters as admission policies, safety,
sanitation, and protection of civil rights.
A person who has legal standing to make decisions on behalf of another
person (e.g., a guardian who has been appointed by the court or an
individual who has power of attorney granted by the person).
A person who has a legal obligation under the provisions of state law to
care for another person. Legal responsibility is defined by State law, and
generally includes the parents (natural or adoptive) of minor children,
legally assigned caretaker relatives of minor children, and sometimes
spouses.
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LEP

See Limited English Proficient Persons

Level of Care

The specification of the minimum amount of assistance that an
individual must require in order to receive services in an institutional
setting under the state plan.
Proof of official or legal permission issued by the government for an
entity or individual to perform an activity or service. In the absence of a
license, the entity or individual is debarred from performing the activity
or service.
Individuals who do not speak English as their primary language and
who have a limited ability to read, write, speak, or understand English
may be limited English proficient (LEP) and eligible to receive language
assistance in conjunction with a particular type of service, benefit, or
encounter. Recipients of federal assistance are required to provide
language assistance to LEP persons in accordance with 42 CFR §
435.905(b).
In the context of the waiver application, the specification of whether a
waiver is operated by the Medicaid agency or by another state agency
under the supervision of the Medicaid agency.
An unrelated personal caregiver who resides in the same household as
the waiver participant. For purposes of the waiver, a live-in caregiver
does not include staff or personnel who reside with a participant or
participants in a residence that is owned or leased by a provider of
Medicaid services.
A local or regional public agency or a non-governmental organization
that performs waiver operational and administrative functions on behalf
of the state. Such entities do not include the local or regional offices of
state agencies.
A variety of services that help people with health or personal needs and
activities of daily living over a period of time. Long-term care can be
provided at home, in the community, or in various types of facilities,
including nursing homes and assisted living facilities.
A term that is sometimes used for the amount of income that a waiver
participant in the §435.217 group is permitted to retain in order to meet
shelter, food and other living expenses of the individual (and his/her
spouse and family, if applicable) in the community. See Personal Needs
Allowance (PNA) for the parallel allocation for residents of institutions.
A method of organizing and financing the delivery of health care and
other services that emphasizes cost-effectiveness and coordination of
care. Managed care organizations receive a fixed amount of money per
member per month (called a capitation), no matter how much care a
member needs during that month. Managed care integrates the financing
and delivery of appropriate services to covered individuals by means of
arrangements with selected providers to furnish an array of services to
members; explicit criteria for the selection of health care providers; and
financial incentives for members to use providers and procedures

License

Limited English
Proficient (LEP)
Persons

Line of Authority

Live-In Caregiver

Local/Regional
Non- State Entity

Long-Term Care

Maintenance
Allowance

Managed Care

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Managed Care
Organization
(MCO)

Managing
Employer
Mandatory

associated with the plan. Federal Medicaid managed care regulations are
located in 42 CFR §438.
As defined in 42 CFR §438.2, an entity that has a comprehensive risk
contract with the Medicaid agency and is (1) a federally qualified Health
Maintenance Organization (HMO) or (2) makes the services it provides
to its Medicaid enrollees as accessible (in terms of timeliness, amount,
duration, and scope) as those services are to other Medicaid recipients
within the area served by the entity.
See Agency with Choice Model.

MCO

The term used to describe the eligibility groups and services that a state
which participates in the Medicaid program must include in its program.
See Managed Care Organization

MCOG

Medicaid and CHIP Operations Group

Measure

A numeric value associated with an indicator. In the quality
improvement context, a quality indicator describes the attributes of care
or services related to quality. A measure is a way of quantifying
attributes. For example, a quality indicator might be expressed as
“eligibility is determined promptly.” A measure associated with this
indicator could be “the average number of days to complete eligibility
determination.”
Any device attached or adjacent to an individual's body that he or she
cannot easily remove that restricts freedom of movement or normal
access to his or her body.
The joint federal and state program to assist states in furnishing medical
assistance to eligible needy persons. Federal law concerning the
Medicaid program is located in Title XIX of the Act. Within broad
national guidelines established by federal statutes, regulations, and
policies, each state (1) establishes its own eligibility standards; (2)
determines the type, amount, duration, and scope of services; (3) sets the
rate of payment for services; and (4) administers its own program.
See Single State Agency

Mechanical
Restraint
Medicaid

Medicaid agency
Medicaid Benefits
Health Program
Group (MBHPG)
Medicaid and
CHIP Operations
Group (MCOG)
Medicaid Buy-In

The organization within CMCS that, among its other duties, is
responsible for Federal administration of the HCBS waiver program.
The organization within CMCS that, among its other duties, conducts
programmatic oversight and monitoring of the HCBS waiver program.
Refers to the Medicaid eligibility options that were created in BBA-97
and the Ticket to Work and Work Incentives Improvement Act of 1999
that permit states to provide Medicaid to working people with
disabilities whose earnings are otherwise too high for them to qualify
for Medicaid. In particular, states may elect to cover:
• Working individuals with disabilities with incomes up to 250%
of poverty (BBA-97; §§1902(a)(10)(A)(ii)(XIII)) of the Act
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•

Working individuals with disabilities who are at least age 16, but
less than 65 years of age using income and resource limits set by
the State (TWWIIA; §1902(a)(10)(A)(ii)(XV) of the Act, and
• Employed individuals covered under the group described above
who lose that coverage due to medical improvement, but who
still have a medically determinable severe impairment.
(TWWIIA §1902(a)(10)(A)(ii)(XVI) of the Act).
Medicaid
A CMS-approved information technology system that supports the
Management
operation of the Medicaid program. The MMIS includes the following
Information
types of sub-systems or files: recipient eligibility, Medicaid provider,
System (MMIS)
claims processing, pricing, SURS, MARS, and potentially encounter
processing.
Medical
The term used in Title XIX of the Act to refer to the payment for items
Assistance
and services covered under a state’s Medicaid program on behalf of
Medicaid beneficiaries.
Medical
The state government entity established in accordance with 42 CFR §
Assistance Unit
431.11(b). The Medical Assistance Unit may be the same as the
Medicaid agency or a subordinate division/unit within the Medicaid
agency.
Medically
Services or supplies that are proper and needed for the diagnosis or
Necessary
treatment of a medical condition, are provided for the diagnosis, direct
care, and treatment of the condition, and meet the standards of good
medical practice.
Medically Needy
A term used to describe an optional Medicaid eligibility group made up
of individuals who qualify for coverage because of high medical
expenses, commonly hospital or nursing home care. These individuals
meet Medicaid categorical requirements (i.e., they are children or
parents or aged or individuals with disabilities), but their income is too
high to permit them to qualify for categorically needy coverage. Instead,
they qualify for coverage by spending down (i.e., reducing their income
by incurring medical expenses). States that elect to cover the medically
needy do not have to offer the same benefit package to them as they
offer to the categorically needy.
Medically Needy
The maximum amount of income remaining after spenddown that
Income Level
permits an individual to qualify for the medically needy eligibility
(MNIL)
group. The MNIL varies by state.
Medicare
The federally administered health insurance program established in Title
XVIII of the Act for persons aged 65 and older and certain persons with
disabilities under age 65. Medicare eligibility is determined by the
Social Security Administration. Medicare has four parts: Part A
(hospital insurance); Part B (optional medical insurance which covers
physicians' services and outpatient care in part and which requires the
payment of a monthly premium); Part C (managed care arrangements
for the delivery of Medicare benefits); and Part D (prescription drugs).
Medicare
The federal legislation (P.L. 108-173) that, among its other provisions,
Prescription Drug, created the Part D Prescription Drug Benefit for Medicare beneficiaries.
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Improvement, and
Modernization
Act of 2003
(MMA)
Medication
Administration
Medication Error

Medication
Management

Memorandum of
Understanding
(MOU)
Methodology
(Eligibility)

Miller Trust

The provision of a medication by a service provider to an individual
who is not able to self-administer his/her own medications.
A mistake in medication administration that includes but is not
necessarily limited to the following: (a) wrong medication (an
individual receives and takes medication which is intended for another
person, discontinued, or inappropriately labeled; (b) wrong dose (an
individual receives the incorrect amount of medication); (c) wrong time
(an individual receives medication dose at an incorrect time interval);
and, (d) omission (missed dose) is when an individual does not receive a
prescribed dose of medication, not including when an individual refuses
to take medication.
Processes and activities that are undertaken in order to ensure that the
full range of medications that a person receives is appropriate.
Medication management may include periodic review of medications to
determine their necessity, to identify possible over medication, and to
identify contraindicated medications.
See Interagency Agreement.
The rules that a state uses in counting an individual’s income or
resources in determining whether he or she meets its Medicaid
eligibility standards. For some eligibility categories, states have the
flexibility to disregard certain income and resources in determining
whether the individual qualifies for Medicaid.
Trusts composed only of pension, Social Security and other income
of the individual, in states which make individuals eligible for
institutional care under the special income level, but do not cover
institutional care in a Nursing Facility for the medically needy. Also
termed “Qualified Income Trust.” As provided in §1917(d)(4)(B) of
the Act (enacted in the Omnibus Budget Reconciliation Act of 1993
(P.L. 103-66)), a state that extends eligibility for institutional care to
individuals under a special income level (i.e., persons who have
incomes up to 300% of the SSI FBR) but not under a medically
needy standard may permit a person who has income that exceeds the
special income level to establish an irrevocable trust so that the
person can qualify for Medicaid. Under such an arrangement, a
person directs sufficient income (but not assets) into trust to reduce
the individual’s income to the amount necessary to qualify under the
special income level. Upon the death of the person, any funds
remaining in the trust are paid to the state up to the amount of
unreimbursed medical assistance paid on the person’s behalf during
the individual’s lifetime.
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MMA
MNIL
Model Waiver

Monitoring

MOU
Neglect

Non-Federal
Share
Non-Risk
Contract

Nursing Facility
(NF)

OASDI

See Medicare Prescription Drug, Improvement, and Modernization Act
of 2003.
See Medically Needy Income Level.
A HCBS waiver that is designed to serve no more than 200 individuals
at any point in time. It is a state option to designate a waiver as a model
waiver.
The ongoing oversight of the provision of waiver and other services to
determine that they are furnished according to the participant’s service
plan and effectively meet his/her needs, including assuring health and
welfare. Monitoring activities may include (but are not limited to)
telephone contact, observation, interviewing the participant and/or the
participant’s family (as appropriate) (in person or by phone), and/or
interviewing service providers.
Memorandum of Understanding; see also Interagency Agreement
The failure to provide an individual the reasonable care that s/he
requires, including but not limited to food, clothing, shelter, medical
care, personal hygiene, and protection from harm.
The amount of funds that a state must provide from its own funds or
other permissible funding sources (e.g., local tax revenues) toward the
cost of Medicaid services or administrative activities.
A type of Medicaid contract under which a provider furnishes an array
of Medicaid services but is not at financial risk for changes in utilization
or for costs incurred under the contract, subject to the upper payment
limits specified in 42 CFR § 447.362. The provider may be reimbursed
by the state at the end of the contract period on the basis of the incurred
costs, subject to the specified limits.
Sometimes referred to as nursing homes. Nursing facility services for
individuals aged 21 and older are a mandatory Medicaid benefit. A
state may provide nursing facility services to individuals under age 21
on an optional basis. Nursing facilities are institutions that primarily
provide:
• Skilled nursing care and related services for residents who
require medical or nursing care;
• Rehabilitation services for the rehabilitation of injured, disabled
or sick persons; and/or
• Health-related care and services, on a regular basis, to
individuals who because of their mental or physical condition
require care and services, above the level of room and board,
which can be made available to them only through institutional
facilities.
See Old-Age, Survivors, and Disability Insurance

Office of Inspector The agency within HHS charged with the responsibility to protect the
General (OIG)
integrity of HHS programs, as well as the health and welfare of the
beneficiaries of those programs. The OIG has a responsibility to report
both to the Secretary and to the Congress program and management
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Instructions: Version 3.7 HCBS Waiver Application

OHCDS
Old-Age,
Survivors, and
Disability
Insurance
(OASDI)
Operating Agency

Operation
(Waiver)

Ombudsman

Optional

Organized Health
Care Delivery
System (OHCDS)

problems and recommendations to correct them. OIG duties are carried
out through a nationwide network of audits, investigations, inspections
and other mission-related functions performed by OIG components.
See Organized Health Care Delivery System
The Social Security programs that pay monthly cash benefits to (1)
retired-worker (old-age) beneficiaries, their spouses and children, and
survivors of deceased insured workers (OASI); and (2) disabled-worker
beneficiaries and their spouses and children and for providing
rehabilitation services to the disabled (SSDI). These programs are
established in Title II of the Social Security Act.
A state agency other than the Medicaid agency that is responsible for the
day-to- day operation and administration of a waiver. An operating
agency conducts waiver operation and administration functions under an
interagency agreement or memorandum of understanding with the
Medicaid agency.
The constellation of administrative activities and processes that are
necessary so that individuals may receive services through the waiver.
Such activities may include functions such as payment rate
determination, training and technical assistance, utilization
management, and prior authorization.
A representative of a public agency or a private nonprofit organization
who is empowered under state law to investigate and resolve complaints
made by or on behalf of individuals who receive services. Under the
provisions of the Older Americans Act, each state has established a
Long-Term Care Ombudsman Office to investigate and resolve
complaints about services in nursing and certain other long-term care
facilities. Some states have established similar programs for individuals
with disabilities.
The term used to describe Medicaid eligibility groups or service
categories that states may cover if they choose and for which they may
receive FFP.
As defined in 42 CFR §447.10, an OHCDS is an organization that
provides at least one Medicaid service directly (utilizing its own
employees) and contracts with other qualified providers to furnish other
services. When there is an OHCDS, the required Medicaid provider
agreement is executed between the state and the OHCDS. Since the
OHCDS acts as the Medicaid provider, it is not necessary for each
subcontractor of an OHCDS to sign a provider agreement with the
Medicaid agency (however, subcontractors must still meet the standards
under the waiver to provide waiver services). When the OHCDS
provides waiver services, payment is made directly to the OHCDS and
the OHCDS reimburses the subcontractors. Waiver providers may not
be restricted to participating only through an OHCDS. Such an
arrangement must be voluntary. In addition, participants may not be
required to secure services exclusively through an OHCDS.
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Outcome
Outcome
Indicator
PACC
Part D

Participant

Participant Cap
ParticipantCentered
ParticipantDirected Budget

ParticipantDirected Service
Participant
Direction
Performance
Measure

Person-Centered
Planning

Personal Agent

The result of the performance (or nonperformance) of a function or
process, including the provision of services.
A key quality characteristic that is measured, over time, in order to
assess whether the provision of services or the performance of activities
resulted in the desired result.
See Program for All-Inclusive Care for Children
The Medicare Prescription Drug Benefit that was established by the
Medicare Prescription Drug, Improvement, and Modernization Act of
2003 (MMA) to take effect on January 1, 2006.
An individual who has met waiver entrance requirements, chooses to
receive waiver services, enters the waiver, and subsequently receives
waiver services authorized in a service plan.
A term used to describe the maximum number of individuals who may
participate in a waiver during the year.
A general term used to describe waiver processes and activities that are
designed to address each participant’s unique goals, preferences and
needs.
An amount of waiver funds that is under the control and direction of the
waiver participant when a waiver makes available the budget authority
participant direction opportunity. Sometimes called the “individual
budget.”
A waiver service that the state specifies may be directed by the
participant using employer authority, budget authority or both.
Provision of the opportunity for a waiver participant to exercise choice
and control in identifying, accessing, and managing waiver services and
other supports in accordance with their needs and personal preferences.
A gauge used to assess the performance of a process or function of any
organization. Quantitative or qualitative measures of the services that
are delivered to individuals (process) or the end result of services
(outcomes). Performance measures also can be used to assess other
aspects of an individual or organization's performance such as access
and availability of care, utilization of care, health plan stability,
beneficiary characteristics, and other structural and operational aspect of
health care services.
An assessment and service planning process are directed and led by the
individual, with assistance as needed or desired from a representative or
other persons of the individual’s choosing. The process is designed to
identify the strengths, capacities, preferences, needs, and desired
outcomes of the individual. The process may include other persons,
freely chosen by the individual, who are able to serve as important
contributors to the process. The PCP process enables and assists the
individual to identify and access a personalized mix of paid and nonpaid services and supports that assist him/her to achieve personally
defined outcomes in the community.
See Information and Assistance in Support of Participant Direction
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Instructions: Version 3.7 HCBS Waiver Application

Personal Care
Services

A range of human assistance provided to persons with disabilities and
chronic conditions of all ages to enable them to accomplish tasks that
they would normally do for themselves if they did not have a
disability. Assistance may take the form of hands-on assistance or as
cueing so that the person performs the task by him/herself. Such
assistance most often relates to performance of activities of daily
living (ADLs) and instrumental activities of daily living (IADLs),
which includes assistance with daily activities such as eating,
bathing, dressing, toileting, transferring, personal hygiene, light
housework, medication management, etc. Personal care may be
furnished in the home or outside the home. Also sometimes known as
“personal assistance” or “attendant care.” Personal care is an optional
State plan benefit (42 CFR § 440.167) and is a waiver service that is
recognized in section 1915(c) of the Act.
Personal Needs
In the case of a Medicaid beneficiary who is a resident of a nursing
Allowance
facility or ICF/IID, the amount of monthly income that he or she is
allowed to keep for personal expenses like haircuts and laundry. The
remainder of the beneficiary’s monthly income is applied to the costs of
care at the facility. The minimum PNA that a state must allow an
institutionalized beneficiary is $30 per month. See Maintenance
Allowance for the parallel allocation for waiver participants whose
eligibility is established via the 42 CFR § 435.217 group.
Personal Restraint Personal restraint means the application of physical force without the
use of any device, for the purposes of restraining the free movement of
an individual's body.
Person-Centered
As used in the waiver application, and as defined in § 441.301(c)(2), the
Service Plan
written document that specifies the waiver and other services (regardless
of funding source) along with any informal supports that are furnished
to meet the needs of and to assist a waiver participant to remain in the
community. The service plan must contain, at a minimum, the types of
services to be furnished, the amount, the frequency and duration of each
service, and the type of provider to furnish each service. FFP may only
be claimed for the waiver services that are furnished to a waiver
participant when they have been authorized in the service plan. In the
application, “person centered service plan” is synonymous with the
statutory term “plan of care.”
Persons Living
Individuals who have Acquired Immunodeficiency Syndrome (AIDS) or
With AIDS
Human Immunodeficiency Virus (HIV) Infection
(PLWAs)
PETI
See Post Eligibility Treatment of Income
Phase-In

Phase-Out

The planned implementation or expansion of an HCBS waiver program
over a specified period of time by increasing the waiver participant cap
in staged increments across one or more waiver years.
The planned contraction of an HCBS waiver program over a specified
period of time by decreasing the participant cap in specified decrements
across one or more waiver years.
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Instructions: Version 3.7 HCBS Waiver Application

Plan of Care

See Person-Centered Service Plan

Post Eligibility
Treatment of
Income (PETI)

The determination of the financial liability (if any) of waiver
participants who are in the §435.217 group for their share of the costs of
waiver services. PETI calculations are only made for members of the
§435.217 group. A state must provide for an allowance for the needs of
the waiver participant to meet shelter, food and other living expenses in
the community (“maintenance allowance” or “personal needs
allowance”), an allowance for the needs of a spouse and the
participant’s family (if applicable), and medical and remedial care
expenses for services not covered under the State plan.
A popular term for eligibility groups, both mandatory and optional, for
whom Medicaid income eligibility is determined against an income
standard that is based on a percentage of the Federal poverty level (FPL)
(e.g., pregnant people and infants with family incomes at or below 133
percent of the FPL).
A regularly paid specified dollar amount that a Medicaid beneficiary
must pay by virtue of enrollment in the Medicaid program.
A prepaid managed care entity that provides less than comprehensive
services on an at-risk basis or one that provides any benefit package on
a non-risk basis. BBA-97 defined two types of prepaid health plans:
prepaid ambulatory plans and prepaid inpatient plans.
As defined in 42 CFR § 438.2, an entity that: (1) provides medical
services to Medicaid enrollees under contract with the Medicaid agency
on the basis of prepaid capitation payments, or other payment
arrangements that do not use state plan payment rates; (2) does not
provide or arrange for, and is not otherwise responsible for the provision
of any inpatient hospital or institutional services for its enrollees; and
(3) does not have a comprehensive risk contract.
As defined in 42 CFR § 438.2, an entity that: (1) provides medical
services to enrollees under contract with the Medicaid and on the basis
of prepaid capitation payments, or other payment arrangements that do
not use state plan payment rates; (2) provides, arranges for, or otherwise
has responsibility for the provision of any inpatient hospital or
institutional services for its enrollees; and, (3) does not have a
comprehensive risk contract.
A mechanism that is employed to control the use of covered items (such
as durable medical equipment or prescription drugs) or services (such as
inpatient hospital care). When an item or service is subject to prior
authorization, payment is not made unless approval for the item or
service is obtained in advance either from state agency personnel or
from a state fiscal agent or other contractor.
As used in the waiver application:
(1) The home that a waiver participant owns or rents in his or her
own right or the home where a waiver participant resides with other
family members or friends. A private residence is not a living

Poverty-Level
Groups

Premium
Prepaid Health
Plan

Prepaid
Ambulatory
Health Plan
(PAHP)

Prepaid Inpatient
Health Plan
(PIHP)

Prior
Authorization

Private Residence

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Instructions: Version 3.7 HCBS Waiver Application

Process
Process
Improvement
Process Indicator
Program for AllInclusive Care for
Children (PACC)
Provider

Provider
Agreement

ProviderManaged Service

Provider
Qualification
Provider Tax

Public Input

QIS
Qualified Income
Trust
Quality Assurance

Quality
Improvement

arrangement that is owned or leased by a service provider; or,
(2) The home of a caregiver who furnishes foster or respite care to a
waiver participant
A goal-directed, interrelated series of actions, events, mechanisms, or
steps.
A methodology utilized to make improvements to a process through the
use of continuous quality improvement methods.
A gauge that measures a goal-directed interrelated series of actions,
events, mechanisms, or steps.
A program offering a blended package of curative and palliative care
services designed to provide support for children with life-threatening
conditions and their families.
A qualified individual or entity that undertakes to render Medicaid
services to beneficiaries and has an agreement with the Medicaid
agency.
The contract between the Medicaid agency and a service provider under
which the provider or organization agrees to furnish services to
Medicaid beneficiaries in compliance with state and Federal
requirements. Federal regulations concerning provider agreements are
located in 42 CFR § 431.107.
A waiver service for which a provider is responsible for directing and
managing in accordance with the service plan on behalf of a waiver
participant. In the waiver application, a state may designate a service as
provider managed, participant-directed or both.
Standards established by the state that specify the education, training,
skills, competencies and attributes that an individual or provider agency
must possess in order to furnish services to waiver participants.
A tax, fee, assessment, or other mandatory payment that health care
providers are required to make to the state. In limited circumstances, a
state may use revenues derived from provider taxes to meet the nonfederal share of Medicaid expenditures. These circumstances are
specified in federal Medicaid law and regulations (see 42 CFR § 433.55
– 433.74).
As used in the waiver application, processes that are undertaken in order
to obtain the comments, suggestions and recommendations of parties
affected by a waiver concerning its design and operation.
See Quality Improvement Strategy
See Miller Trust
The process of looking at how well a service is provided. The process
may include formally reviewing the services furnished to a person or
group of persons, identifying and correcting problems, and then
checking to see if the problem was corrected.
The performance of discovery, remediation, and quality improvement
activities in order to ascertain whether the waiver meets the assurances,
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Quality
Improvement
Strategy (QIS)

RAI
Reassignment (of
Payment)
Reevaluation

Regular Waiver
Rehabilitation

Related
Conditions

correct shortcomings, and pursue opportunities for improvement.
Quality improvement also is employed to address other areas of waiver
performance.
The document that is submitted with the waiver application that
describes how the state will continually assess whether it operates the
waiver in accordance with the approved design of its program, meets
statutory and regulatory assurances and requirements, achieves desired
outcomes, and how it identifies opportunities for improvement. A QIS
describes the processes of discovery, remediation, and quality
improvement activities; the frequency of those processes; the source and
types of information gathered, analyzed, and utilized to measure
performance; and key roles and responsibilities for managing quality.
The QIS may vary depending on the nature of the waiver target
population, the services offered, and the waiver’s relationship to other
public programs, and extend beyond regulatory requirements. Updates
to the QIS will be submitted with the annual waiver report.
See Request for Additional Information
The voluntary assignment of the payment for Medicaid services by the
provider to a governmental entity.
The periodic but at least annual review of an individual’s condition and
service needs to determine whether the person continues to need a level
of care specified in the waiver.
A waiver program that is not a model waiver. A regular waiver may
serve any number of participants specified by the state.
Services that have the purpose of improving/restoring a person's
physical or mental functioning. Such services may include therapeutic
services such as occupational and physical therapy services, as well as
mental health services such as individual and group psychological
therapies, psychosocial services, and addiction treatment services.
Rehabilitative services may be provided at home, in the community or
in long-term care facilities. Medicaid rehabilitation services, defined at
42 CFR § 440.130(d), may be covered as an optional state plan benefit
or as waiver services.
For the purpose of ICF/IID services and as provided in 42 CFR §
435.1009, persons with related conditions are individuals who have
a severe, chronic disability that meets all of the following
conditions:
(a) It is attributable to-(1) Cerebral palsy or epilepsy; or
(2) Any other condition, other than mental illness, found to be
closely related to intellectual disability because this condition
results in impairment of general intellectual functioning or
adaptive behavior similar to that of persons with an
intellectual disability, and requires treatment or services
similar to those required for these persons.
(b) It is manifested before the person reaches age 22.
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Instructions: Version 3.7 HCBS Waiver Application

following areas of major life activity: (1) self-care; (2)
understanding and use of language; (3) learning; (4) mobility; (5)
self-direction; (6) capacity for independent living.
Remediation
Activities designed to correct identified problems at the individual,
provider or system level. Examples of individual level remediation
include providing additional needed services when discovery activities
indicate that an individual/participant has not received necessary
services. Provider level remediation includes sanctioning a provider for
failure to furnish services in accordance with state requirements.
System-level remediation activities may include the correction of
underlying waiver design problems.
Representative
A person who may act on behalf of another. A representative may be:
(a) a legal representative (a court-appointed guardian, a parent of a
minor child, or a spouse) or (b) an individual (family member or friend)
selected by an adult to speak for and/or act on his/her behalf.
Request for
A formal, written document issued by CMS that identifies serious
Additional
problems with a waiver request that potentially could cause CMS to
Information (RAI) disapprove the request. A RAI stops the 90-day clock. Once a state
responds to the RAI, a new 90-day clock is started. During the second
clock CMS may not issue a RAI — it must approve or disapprove the
request.
Resources
Sometimes referred to as assets, resources are items of economic value
that are not income. Resources include financial instruments such as
savings accounts and certificates of deposit, personal property such as
an automobile (above a specified value), and real estate (other than an
individual’s home). Some Medicaid eligibility groups must meet a
resource test; others (at state option) are not subject to a resource test. In
establishing a resource test, a state must specify both the resource
standard (e.g., the amount of countable resources an individual may
retain and still be eligible for Medicaid) and the resource methodology
(e.g., the resources that are counted and how are they valued).
Resource
The maximum amount of countable resources a person can have and
Standard
still be eligible for Medicaid.
Restraint
Any physical, chemical or mechanical intervention that is used to
control acute, episodic behavior that restricts the movement or function
of the individual or a portion of the individual’s body.
Restrictive
An action or procedure that limits an individual’s movement, a person’s
Intervention
access to other individuals, locations or activities, or restricts participant
rights. Restraints or seclusion are a subset of restrictive interventions.
Risk
Factors that, if unaddressed, might pose a high threat to an individual’s
health and welfare. These include: (a) health risk (medical conditions
that require continuing care and treatment); (b) behavioral risk
(behaviors or conditions that might cause harm to the person or others);
and (c) personal safety risk (e.g., safe evacuation).
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Instructions: Version 3.7 HCBS Waiver Application

Risk Management
Agreement
Room and Board

See Individual Risk Agreement

Secretary

The term “room” means shelter type expenses, including all propertyrelated costs such as rental or purchase of real estate and furnishings,
maintenance, utilities, and related administrative services. The term
“board” means three meals a day or any other full nutritional regimen.
Board does not include the provision of a meal at an adult day health or
similar facility outside the participant’s home. Board also does not
include the delivery of up to two meals per day and which do not
constitute a full nutritional regimen to a participant at his/her own home
through a meals-on-wheels service.
Policies or procedures that are designed to prevent harm to an individual
or to ensure that the application of a policy takes into account
potentially adverse effects on a person.
Seclusion means the involuntary confinement of an individual alone in a
room or an area from which the individual is physically prevented from
having contact with others or leaving.
Secretary of the U.S. Department of Health and Human Services

SelfAdministration
Self-Direction

The administration of medications or other procedures by a person
without assistance.
See Participant Direction

Serious Emotional
Disturbance

The range of diagnosable emotional, behavioral, and mental disorders
that are of sufficient duration so as to result in functional impairment
that substantially interferes with or limits one or more major life
activities of children and adolescents up to age 18 in the home, school,
or community. Such disorders include externalizing behavior disorders
(e.g., attention deficit hyperactivity disorder and conduct disorder),
internalizing emotional disorders (e.g., anxiety and depression) and
other disorders of lesser frequency but often great severity, such as
bipolar disorder, pervasive developmental disorder, and psychophysiological disorder.
An injury that requires the provision of medical treatment beyond what
is commonly considered first aid.
Pursuant to section 1912(c) of the Public Health Service Act, adults with
serious mental illnesses are persons: (1) age 18 and over and (2) who
currently have, or at any time during the past year have had a
diagnosable mental, behavioral or emotional disorder of sufficient
duration to meet diagnostic criteria specified within DSM- IV or their
ICD-9-CM equivalent (and subsequent revisions) with the exception of
DSM-IV "V" codes, substance use disorders, and developmental
disorders, which are excluded, unless they co-occur with another
diagnosable serious mental illness and (3) for whom the disorder has
resulted in functional impairment, which substantially interferes with or
limits one or more major life activities.

Safeguard

Seclusion

Serious Injury
Serious Mental
Illness

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Single Audit Act
Amendments of
1996
Single State
Agency

SSI Criteria State

Social Security
Act

Social Security
Administration
(SSA)
Social Security
Disability
Insurance (SSDI)

SPA

The Federal law (P.L. 104-156, U.S.C. Title 31, Chapter 75) that
establishes the standards and requirements for the performance of audits
of entities that receive federal funds, including Medicaid.
The agency within state government that has been designated pursuant
to section 1902(a)(5) of the Act as responsible for administration of the
state plan. The single state agency is not required to directly administer
the entire Medicaid program; it may provide that administrative
functions are conducted by other state (or local) agencies or private
contractors (or both) so long as the Single State Agency maintains
ultimate authority and responsibility for the administration of the state
plan. In the waiver application, the Single State Agency is referred to as
the Medicaid agency.
A state that uses the SSI income and resource criteria to determine
eligibility for Medicaid for aged, blind, and disabled individuals but
requires that such individuals apply separately to the state for Medicaid.
Public Law 74-271, enacted on August 14, 1935, and its subsequent
amendments. The Medicaid program is authorized in Title XIX of the
Act; the Medicare program is authorized in Title XVIII of the Act; and,
Title XXI of the Act establishes the State Children’s Health Insurance
Program.
The federal agency that, among its other duties, administers the Old
Age, Survivors, and Disability Insurance (OASDI) and Supplemental
Security Income (SSI) programs and determines the initial entitlement
to and eligibility for Medicare benefits.
The system of federally provided payments to eligible workers (and, in
some cases, their families) when they are unable to continue working
because of a disability. Benefits begin with the sixth full month of
disability and continue until the individual is capable of substantial
gainful activity.
See State Plan Amendment

Special Home and The eligibility group defined in 42 CFR §435.217 that is composed of
Community-Based individuals in the community who would be eligible for Medicaid if
Waiver Group
institutionalized to whom the state elects to provide waiver services.
Also referred to as the §435.217 group.
Special Income
The eligibility group defined in 42 CFR § 435.236 that is composed of
Group
individuals in institutions who have too much income to qualify for SSI
benefits but not enough income to cover their expensive long-term care.
This group also is referred to as individuals who qualify for Medicaid
under the 300% of SSI rule. A state may provide that persons with
incomes up to 300% (or a lower percentage specified the state) of the
SSI FBR may qualify for Medicaid when institutionalized.
Spenddown
For most Medicaid eligibility categories, having countable income
above a specified amount disqualifies an individual from Medicaid.
However, in some eligibility categories—most notably the “medically
needy”—individuals may qualify for Medicaid coverage even though
their countable incomes are higher than the specified income standard
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Instructions: Version 3.7 HCBS Waiver Application

SSA

by “spending down” to the medically needy income level. Under this
process, the medical expenses that an individual incurs during a
specified period are deducted from the individual’s income during that
period. Once the individual’s income has been reduced to a statespecified level by subtracting incurred medical expenses, the individual
qualifies for Medicaid benefits for the remainder of the period.
The term used to describe the set of eligibility rules that states are
required to apply under the provisions of section 1924 of the Act in the
case when a Medicaid beneficiary resides in a nursing facility and his or
her spouse remains in the community. The rules, which specify
minimum amounts of income and resources each spouse is allowed to
retain without jeopardizing the institutionalized spouse’s eligibility for
Medicaid benefits, are designed to prevent the impoverishment of the
community spouse. Under certain circumstances, a state may elect to
use these rules in determining eligibility for a waiver.
See Social Security Administration

SSDI

See Social Security Disability Insurance

SSI

See Supplemental Security Income

State Medicaid
Director (SMD)
Letter

A formal letter issued by the Director of the Center for Medicaid and
State Operations (CMCS) to state Medicaid directors for the purpose of
providing technical guidance or updated information regarding the
operation of the Medicaid program.
The document that specifies the eligibility groups that a state will serve
through its Medicaid program, the benefits that the state covers, and
how the state addresses additional Federal Medicaid statutory
requirements concerning the operation of its Medicaid program. The
state plan must be submitted to and approved by CMS, acting on behalf
of the Secretary of HHS. Proposed changes to the state plan take the
form of state plan amendments (SPAs) that are submitted to, reviewed
and approved by CMS.
See State Medicaid Plan

Spousal
Impoverishment
Protections

State Medicaid
Plan (State Plan)

State Plan
State Plan
Amendment
(SPA)

State
Supplementary
Payment (SSP)
State
Unemployment
Tax (SUTA)
Statewideness

In order to change its Medicaid eligibility criteria or its covered benefits
or its provider reimbursement methodology, a state must amend its state
Medicaid plan to reflect the proposed change. Similarly, states must
conform their state plans to changes in federal Medicaid law. In either
case, the state must submit a state plan amendment (SPA) to CMS for
approval.
The amount (if any) by which a state elects to supplement the basic SSI
cash assistance payment to individuals and couples.
The tax paid to a state workforce agency that is used solely for the
payment of benefits to eligible unemployed workers.
The requirement in section 1902(a)(1) of the Act that a state must
operate its Medicaid programs throughout the state and may not exclude
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Instructions: Version 3.7 HCBS Waiver Application

Supplemental (or
Enhanced)
Payment
Supplemental
Security Income
(SSI)
Supports Broker
(Brokerage)
SUTA
Target Group

individuals residing in, or providers operating in, particular counties or
municipalities. This requirement may be waived under section 1115,
section 1915(b), and section 1915(c) waivers.
Any payment to a Medicaid provider that is in addition to the state’s
standard direct payment for services rendered to a Medicaid beneficiary
and billed by a provider.
The federal entitlement program established under Title XVI of the Act
to provide cash assistance to certain persons who are aged, blind, or
disabled and whose income and resources fall below the SSI income and
resource standards that are set by the Federal government.
See Information and Assistance in Support of Participant Direction
See State Unemployment Tax

TCM

A group of Medicaid beneficiaries who have similar needs, conditions
or characteristics to whom a state elects to furnish waiver services.
Common HCBS waiver target groups include older persons, individuals
with physical disabilities, persons who have experienced a brain injury,
and persons with developmental disabilities. A state must specify the
target group(s) that it serves in the waiver.
As provided in section 1915(g) of the Act, optional state plan services
that are furnished to assist Medicaid beneficiaries to gain access to
needed medical, social, educational, and other services. TCM services
may be furnished to target groups specified by the state on a statewide
or less than statewide basis.
A person who needs both a medical device to compensate for the loss of
a vital body function and substantial and ongoing nursing care to avert
death or further disability.
See Targeted Case Management

TEFRA 134

See Katie Beckett Option

Telemedicine

The use of communication equipment to link health care practitioners
and patients in different locations. This technology is used by health
care providers for many reasons, including increased cost efficiency,
reduced transportation expenses, improved patient access to specialists
and mental health providers, improved quality of care, and better
communication among providers.
A block grant program that makes federal matching funds available to
states for cash and other assistance to low-income families with
children. TANF replaced the Aid to Families with Dependent Children
(AFDC) program. States may but are not required to extend Medicaid
coverage to all families who receive TANF benefits; however, as
provided in section 1931 of the Act, a state must extend Medicaid to
families with children who meet the eligibility criteria that were in
effect under its AFDC programs as of July 16, 1996.
The Medicaid term used to refer to another source of payment for
Medicaid covered services provided to a beneficiary. For example, if a

Targeted Case
Management

Technology
Dependent

Temporary
Assistance for
Needy Families
(TANF)

Third Party
Liability (TPL)

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Instructions: Version 3.7 HCBS Waiver Application

Timeout

Title XIX
TPL
Tribal
Government

TWWIIA
Unduplicated
Participant

Waiver Capacity
Waiver Period

Waiver Year
Workers’
Compensation

Medicaid beneficiary is also eligible for Medicare, the Medicare
program is liable for the costs of that beneficiary’s hospital and
physician services, up to the limit of Medicare’s coverage. From the
Medicaid program’s standpoint, Medicare is a liable third party. Other
examples include private health insurance coverage, automobile and
other liability insurance, and medical child support.
Time out means the restriction of an individual for a period of time to a
designated area from which the person is not physically prevented from
leaving for the purpose of providing the person an opportunity to regain
self-control.
Refers to Title XIX of the Social Security Act (42 U.S.C. 1396 et seq.),
the Federal statute that authorizes the Medicaid program.
See Third-Party Liability
The government of an ‘‘Indian tribe,’’ including an Indian or Alaska
Native tribe, band, nation, pueblo, village, or community that the
Secretary of the Interior acknowledges to exist as an Indian tribe
pursuant to the Federally Recognized Indian Tribe List Act of 1994, 25
U.S.C. 479a.
Ticket to Work & Work Incentives Improvement Act of 1999 (P.L. 106170). See also Medicaid Buy-In.
A unique individual who receives waiver services at any point during a
waiver year, regardless of the length of time that the person is enrolled
in the waiver or the amount of waiver services that the person receives.
A person who enters, exits and then reenters the waiver is considered to
be one unduplicated participant.
A term used to describe the maximum unduplicated number of
individuals who may participate in a waiver during a year.
The period of time that a waiver is in effect. In the case of a new waiver,
the waiver period is three years. In the case of a renewal, the waiver
period is five years.
The 12-month period that begins on the date the waiver takes effect and
the 12- month period following each subsequent anniversary date of the
waiver.
State-mandated system under which employers assume the cost of
medical treatment and wage losses for employees who suffer job-related
illnesses or injuries, regardless of who is at fault.

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Instructions: Version 3.7 HCBS Waiver Application

Index to the Application and Instructions
The Index is organized by topic. Each topic is indexed by its location within the waiver application
(appendix, sub-appendix, and item reference). “App” means the “Application” (Module 1 of the
waiver request). In addition, each topic is indexed by the location in the instructions where the
topic is discussed or the Resource Attachment (“Attach.”) that contains additional information
about a topic.
Topic
90-Day Clock
§435.217 Eligibility Group (Eligibility Groups Served
Under the Waiver)
§1616(e) of the Social Security Act
§1616(e) of the Social Security Act (Facilities Subject to)
§1915(c) of the Social Security Act
§1915(c) Waivers that Operate with Concurrent Managed
Care
Abuse Registry Screening
Access to Services (Requirement)
Access to Services by Limited English Proficient Persons
Additional Criteria (Target Group Specification)
Additional Dispute Resolution Process
Additional Limits on Amount of Waiver Services
Additional Requirements (General)
Administration and Operation (Waiver)
Adult Companion Services (Core Service Definition)
Adult Day Health (Core Service Definition)
Adult Foster Care (Core Service Definition)
Allocation of Waiver Capacity (by geographic area)
Allowance for a Family (Post-Eligibility)
Allowance for a Spouse (Post-Eligibility)
Allowance for the Needs of the Waiver Participant (PostEligibility)
Alternate Provision of Case Management to Waiver
Participants
Amending an Approved Waiver Using the Version 3.7
Waiver Application
Amount of Payment to Public Providers
Annual Waiver Report (Assurance)
Annual Waiver Report (Description)
Applicable Limits on Amount, Frequency or Duration
Application for a §1915(c) Home and Community-Based
Services Waiver Module 1

Application

Instructions

N/A
B-4-b

20-21
81-82

N/A
C-2-c
N/A
N/A

Attach. C
107
Attach. A
21-22

C-2-b
App. (Sect. 6D)
B-8
B-1-b
F-2
C-4
App. (Sect. 6)
A
N/A
N/A
N/A
B-3-e
B-5
B-5
B-5
C-1-b
App. (Sect. 1C)
I-3-e
N/A
N/A
C-3
App. (Module
1)

107
45-46
102
68-69
221-223
131-135
44-48
52-64
170-171
146
168-169
78-79
84
84
83-84
105
35-36
261-262
29
29-31
126-127
35-51

359
Instructions: Version 3.7 HCBS Waiver Application

Topic
Approved Effective Date
Assessment Methods and Frequency (Oversight of
Contracted and/or Local/Regional Non-State Entities)
Assisted Living (Core Service Definition)
Assistive Technology (Core Service Definition)
Assurances
Authorizing Signature
Availability of Participant Direction by Type of Living
Arrangement
Average Length of Stay
Bereavement Counseling (Core Service Definition)
Billing and Claims Record Maintenance Requirement
Billing Validation Process
Brief Waiver Description
Budget Authority (Participant Direction)
Budget Authority (Participant Decision Making Authority)
Budget Flexibility (Participant Direction)
Budget Limit by Level of Support
Carry Over Services (Service Specifications)
Case Management (When not provided as a waiver service)
Case Management (Core Service Definition)
CMS-372(S) Report
CMS Oversight of State Waiver Operations
CMS Ongoing Waiver Application Activities
CMS Report to State Prior to Waiver Renewal
CMS Technical Assistance
Certifying Public Expenditures
Children’s Education Services (Coverage)
Children’s Foster Care Services (Coverage)
Chore Services (Core Service Definition)
Combining Waivers
Community Transition Services (Core Service Definition)
Community Transition Services (Coverage)
Companion Services (Core Service Definition)
Comparability (waiver of)
Components of the Waiver Request
Concurrent Operation with Other Programs
Consultative Clinical and Therapeutic Services (Core
Service Definition)
Contact Person(s)
Contracted Entities (Waiver Administration)
Contracted Entities (Assessment of Performance)

Application
App. (Sect. 1E.2)
A-6

Instructions
37

N/A
N/A
App. (Sect. 5)
App. (Sect. 8)
E-1-c

169-170
164-165
43
48-49
195-196

J-2-b
N/A
I-2-e
I-2-d
App. (Sect. 2)
E-2-b
E-2-b-i
E-2-b-iv
C-4
C-3
C-1-b
N/A
N/A
N/A
N/A
N/A
N/A
I-2-c
N/A
N/A
N/A
N/A
N/A
N/A
N/A
App. (Sect. 4)
App. (Sect. 3)
App. (Sect. 1G)
N/A

276
172-173
258
311
40
214-217
214
216-217
132
125
105-106
141-142
29-30
30-31
16-17
31
27
256-257
121
121
170
24
165-166
122
170-171
41
40
39

App. (Sect. 7)
A-4
A-5; A-6

48
60-61
61-62

61-62

171-172

360
Instructions: Version 3.7 HCBS Waiver Application

Topic
Contracts with MCOs, PIHPs, or PAHPs
Converting a Model Waiver to a Regular Waiver
Co-Payments (Waiver Services)
Core Service Definitions
(Individual) Cost Limit in Excess of Institutional Costs
(Individual) Cost Limit Lower than Institutional Services
Cost Neutrality Demonstration
Cost Neutrality Formula
Cost Sharing (Participant)
Criminal History/Background Investigations
Critical Events or Incidents
Critical Events or Incidents: Oversight Responsibilities
Critical Event or Incident Reporting Requirements
Critical Events or Incidents (Responsibility for Review and
Response)
Day Habilitation (Core Service Definition)
Day Treatment (Core Service Definition)
Derivation of Estimates (Cost Neutrality)
Description of Participant Direction (in Waiver)
Direct Payment
Distribution of Waiver Operational and Administrative
Functions
Division Review (Problem Resolution)
Education (Core Service Definition)
Effective Date (Proposed or Approved)
Election of Participant Direction (by Participant)
Eligibility Groups
Employer Authority
Employer Authority (Participant Decision Making
Authority)
Employer Status (Participant)
Enhanced Payments
Entrants to Waiver (Selection)
EPSDT Services (Relationship to Waiver Services)
Evaluation/Re-evaluation of Level of Care
Exclusion of Medicaid Payment for Room and Board
Expenditure Safeguards (Participant Direction)
Extended State Plan Services
Extended State Plan Services (Core Service Definition)
Extensions
Facilities Subject to §1616(e) of the Social Security Act
Factor D (Derivation of Cost Neutrality Estimates)
Factor D (Estimate)

Application
I-3-g-iii
N/A
I-7-a
N/A
B-2-a
B-2-a
Appendix J
J-1
I-7-b
C-2-a
G-1
G-1-e
G-1-b
G-1-d
N/A
N/A
J-2-c
E-1-a
I-3-b
A-7

Instructions
265-266
24
271-273
140-177
70-72
70-72
272-281
272-273
271-273
106-107
225
228-229
225-226
227-228
148-150
157-159
276-280
194-195
259-260
62-63

N/A
N/A
App. (Sect. 1E)
E-1-d
B-4
E-2-a
E-2-a-ii

19
150
37
196-198
80-82
211-214
212-214

E-2-a-i
I-3-c
B-3-f
N/A
B-6
I-5
E-2-b-v
C-1-a
N/A
N/A
C-2-c
J-2-c-i
J-2-d

211-212
260-261
79-80
120-121
92-99
269
217
103-104
174-175
25
107
277-278
281-282
361

Instructions: Version 3.7 HCBS Waiver Application

Topic
Factor D′ (Derivation of Cost Neutrality Estimates)
Factor G (Derivation of Cost Neutrality Estimates)
Factor G′ (Derivation of Cost Neutrality Estimates)
Fair Hearing (Opportunity to Request)
Fair Hearing (Requirement)
Feasible Alternatives (Informing of)
Federal Administration of the HCBS Waiver Authority
FFP Limitation (Requirement)
Federal Regulations (Selected)
Financial Accountability
Financial Integrity and Accountability
Financial Management Services (Whether included)
Financial Management Services (Core Service Definition)
Financial Management Services (Overview)
Financial Management Services (Provision of)
Flow of Billings
Free Choice of Provider (Requirement)
Freedom of Choice (Between Institutional and Waiver
Services)
Freedom of Choice (Maintenance of Forms)
Freedom of Choice (Procedures)
General Service Specifications
Geographic Limitation (Waiver of Statewideness)
Glossary of Terms and Abbreviations
Goals for Participant Direction
Grievance/Complaint System
Habilitation Services (Core Service Definition)
Home Accessibility Modifications (Core Service Definition)
HCBS Waiver Resources on the Web
Home Health Aide Services (Core Service Definition)
Homemaker Services (Core Service Definition)
Implementation of the Web-Based Application
Income and Resources for the Medically Needy (Waiver)
Independent Advocacy (Participant Direction)
Individual Cost Limit
Individual Cost Limit (Method of Implementation)
Individual Cost Limit (Participant Safeguards)
Individual Directed Goods and Services (Core Service
Definition)

Application
J-2-c-ii
J-2-c-iii
J-2-c-iv
F-1
App. (Sect. 6G)
B-7-a
N/A
App. (Sect. 6F)
N/A
Appendix I
I-1
E-1-h
N/A
N/A
E-1-i
I-2-b
App. (Sect. 6E)
B-7

Instructions
278-279
279-280
280
220-221
46

B-7-b
B-7-a
C-2
App. (Sect. 4C)
N/A
E-1-n
F-3
N/A
N/A
N/A
N/A
N/A
N/A
App. (Sect. 4B)
E-1-k
B-2; B-2-a
B-2-b
B-2-c
N/A

100
100
106-115
44-45

100
13
46
Attach. B
248-272
248-250
203-204
176-177
200-203
204-206
2255
48
99-100

285-313
210-211
223-224
146-147
161-162
14
143-144
142
16
41-42
208-209
69-72
72
72-73
172

362
Instructions: Version 3.7 HCBS Waiver Application

Topic
Information and Assistance in Support of Participant
Direction (Core Service Definition)
Information and Assistance in Support of Participant
Direction
Information and Assistance in Support of Participant
Direction (Overview)
Information Furnished to Participants (Participant Direction)
Informed Choice of Providers (Service Plan Development)
Informing Participant of Budget Amount (Participant
Direction))
Inpatients (Prohibition against furnishing waiver services to)
Institutional (Individual) Cost Limit
Instructions - Overview
Involuntary Termination of Participant Direction
CMS Joint Office Waiver Review Process
Legally Responsible Individuals (Provision of Personal Care
or Similar Services by)
Legislative History of the HCBS Waiver Authority
Level(s) of Care (Under the Waiver)
Level of Care Criteria
Level of Care (Evaluation/Reevaluation)
Level of Care Instrument(s)
Level of Care (Process for Evaluation/Reevaluation)
Limitation on the Number of Participants Served at any
Point in Time
Limited English Proficient Persons (Requirement)
Limited English Proficient Persons (Access to Services by)
Limited Implementation of Participant Direction (Waiver of
Statewideness)
(Additional) Limits on Amount of Waiver Services
Limits on Amount, Frequency or Duration
Limits on Sets of Services
Line of Authority (Waiver Operation)
Live-In Caregiver (Core Service Definition)
Live-In Caregiver (Payment for Rent and Food Expenses)
Local/Regional Non-State Entities (Role of in Waiver
Administration and Operation)
Local/Regional Non-State Entities (Assessment of
Performance)
Maintenance of Evaluation/Reevaluation (of Level of Care)
Records

Application
N/A

Instructions
175-176

E-1-j

206-208

N/A

206

E-1-e
D-1-f
E-2-b-iii
App. (Sect. 6B)
B-2-a
N/A
E-1-m
N/A
C-2-d

198-199
184
215-216
44-45
70-72
1-3
210
19
108-110

N/A
App. (Sect. 1F)
B-6-d
B-6
B-6-e
B-6-f
B-3-b

4
37-39

App. (Sect. 6K)
B-8
App. (Sect. 4C)
C-4
C-3
C-4
A-1
N/A
I-6
A-4

A-5; A-6
B-6-j

94-95
92-99
95-96
96
75

102
42-43
131-135
126-127
131-133
54-55
161
269-270
60-61
61-62
98

363
Instructions: Version 3.7 HCBS Waiver Application

Topic
Application
Maintenance of Forms (Freedom of Choice)
B-7-b
Maintenance of Service Plan Forms
D-1-i
Maximum Age Limit (Transition of Individuals Affected by)
B-1-c
Medicaid Agency Oversight of Operating Agency
A-2
Performance
Medicaid Eligibility Groups Served in the Waiver
B-4; B-4-b
Medicaid Management Information System
I-3-a
Medical and Remedial Care Expenses (Post-Eligibility)
B-5
Medication Administration by Waiver Providers
G-3-c
Medication Administration (State Oversight Responsibility)
G-3-c-iv
Medication Error Reporting
G-3-c-iii
Medication Management and Administration
G-3
Medication Management and Follow-up
G-3-b
Medication Management (State Oversight and Follow-up)
G-3-b-ii
Mental Health Services (Core Service Definitions)
N/A
Method of Implementation of Individual Cost Limit
B-2-b
Method of Payment - MMIS
I-3-a
Miller Trusts
N/A
Model Waiver
App. (Sect. 1D)
Monitoring Safeguards
D-2-b
New Waiver Applications
N/A
New Waiver to Replace an Approved Waiver
N/A
No (Individual) Cost Limit
B-2-a
Non-Federal Matching Funds
I-4
Non-Medical Transportation (Core Service Definition)
N/A
Notice to Tribal Governments (Requirement)
App. (Sect. 6 J)
Number of Individuals Served (in the waiver)
B-3; J-2-a
Olmstead Letter #3
Olmstead Letter #4
Ongoing CMS-State Dialogue During the Waiver Period
Open Enrollment of Providers
Operating Agency (Specification)
Operating Agency Performance (Medicaid Agency
Oversight)
Operating Agency Representative
Operational and Administrative Functions (Waiver)
Operational and Administrative Functions (Distribution of)
Opportunities for Participant Direction
Opportunity to Request a Fair Hearing
Organization of the Version 3.7 HCBS Waiver Application

N/A
N/A
N/A
C-2-f
A-1
A-2
App. (Sect. 7B)
N/A
A-7
E-2
F-1
N/A

Instructions
100-101
186
69
55-57
80-82
258-259
84-85
239
240-241
240
237-242
238
238-239
157
72
258-259
85-86
36
187-188
21
22-23
70-71
266-269
162-163
47-48
74-80; 275276
Attach. C
Attach. C
30-31
112-114
54-55
55-57
48
57-59
62-63
211-217
220-221
15-16
364

Instructions: Version 3.7 HCBS Waiver Application

Topic
Organized Health Care Delivery System
Other Services (Coverage)
Other State Policies Concerning Payment for Waiver
Services Furnished by Relatives/ Legal Guardians
Out-of-State Services (Coverage)
Oversight of Contracted and/or Local/Regional Non-State
Entities (Waiver Administration)
Overview of the §1915(c) HCBS Waiver Authority
Oversight Responsibility (Restraints or Seclusion)
Participant Access and Eligibility
Participant Budget Authority
Participant Cap (Unduplicated Number of Participants)
Participant-Centered Planning and Service Delivery
Participant Co-Payments for Waiver Services and Other
Cost Sharing
Participant Decision Making Authority (Employer
Authority)
Participant-Directed Budget
Participant-Directed Services
Participant Direction (Availability by Type of Living
Arrangement)
Participant Direction by a Representative
Participant Direction (Election by Participant)
Participant Direction (Goals)
Participant Direction (Information Furnished to Participants)
Participant Direction of Services
Participant Direction of Services (Coverage)
Participant Direction Opportunities
Participant Direction (Involuntary Termination)
Participant Direction (Voluntary Termination)
Participant Direction (Waiver of Statewideness)
Participant – Employer Authority
Participant Exercise of Budget Flexibility (Participant
Direction)
Participant Limit (Number of Individuals Served)
Participant Limit Reductions
Participant Rights
Participant Safeguards
Participant Safeguards (Individual Cost Limit)
Participant Services
Participant Training and Education (Critical Incidents)
Payment

Application
I-3-g-ii
C-1-a
C-2-e

Instructions
263-265
103
110-112

N/A
A-5 & A-6

122-123
61-62

N/A
G-2-b-ii
Appendix B
E-2-b
B-3-a
Appendix D
I-7

1-3
233-235
65-102
214-217
74
178-189
271-273

E-2-a-ii

212-214

E-2-b-ii
E-1-g
E-1-c

214-215
199-203
195-196

E-1-f
E-1-d
E-1-n
E-1-e
Appendix E
N/A
E-2
E-1-m
E-1-l
App. (Sect. 4C)
E-2-a
E-2-b-iv

199
196-198
210-211
198-199
191-217
122
211-217
210
209-210
42-43

B-3; B-3-a
N/A
Appendix F
Appendix G
B-2-c
Appendix C
G-1-b
I-3

73-75
24-25
220-224
225-242
72-73
102-177
225-226
258-266

211-214
216-217

365
Instructions: Version 3.7 HCBS Waiver Application

Topic
Payment for Waiver Services Furnished by Relatives/Legal
Guardians
Payments to State or Local Government Providers
Personal Care (Core Service Definition)
Personal Emergency Response System (Core Service
Definition)
Persons with Mental Illnesses (Target Group)
Pharmacy Services (Coverage)
Phase-In or Phase Out
Phase-In or Phase-Out Schedule
Policies Concerning New and Renewal Waiver Applications
Policies Concerning Waiver Amendments
Post-Approval Activities
Post-Eligibility Treatment of Income
Post-Eligibility Treatment of Income Using Spousal
Impoverishment Rules
Prevocational and Supported Employment Services
(Coverage)
Prevocational Services (Core Service Definition)
Principal Features of the HCBS Waiver Authority
Private Duty Nursing (Core Service Definition)
Procedures to Ensure Timely Reevaluations (of Level of
Care)
Procedures (Informing of Feasible Alternatives and Choice
of Services)
Process for Level of Care Evaluation/Reevaluation
Process for Making Service Plan Subject to Medicaid
Agency Approval
Process for Offering Opportunity to Request a Fair Haring
Proposed Effective Date
Prospective Individual Budget Amount
Provider Administration of Medications
Provider Enrollment (Open)
Provider Qualifications (Service Specifications)
Provider Qualifications (Verification)
Provider Requirements (Service Specifications)
Provider Retention of Payments
Provision of Financial Management Services
Provision of Personal Care or Similar Services by Legally
Responsible Individuals
Provision of Waiver Services Out-of-State

Application
C-2-e
I-3-d
N/A
N/A
B-1-a
N/A
B-3-d
Attach. #1 – B3
N/A
N/A
N/A
B-5
B-5-a

Instructions
110-112
261
144-146
165
67-68
119
76-78
77-78
19-25
26-27
29-31
82-92
86-87

N/A

121-122

N/A
N/A
N/A
B-6-i

150-152
4-8
167-168
97-98

B-7-a

100

B-6-f
D-1-g

96
184-185

F-1
App. (Sect. 1E.1)
C-4
G-3-c.i
C-2-f
C-3
C-3
N/A
I-3-f
E-1-i
App. C-2-d

220-221
36-37

N/A

132
239
112-114
128-129
129-130
123,127-129
262-263
204-206
108-110
122-123

366
Instructions: Version 3.7 HCBS Waiver Application

Topic
Psychosocial Rehabilitation Services (Core Service
Definition)
Public Input (Waiver Development)
Public Providers (of Waiver Services)
Purchase of Certain Goods and Services Through a FMS
Entity
Purpose of the HCBS Waiver Program
Qualifications of Individuals Performing Initial Evaluation
(of Level of Care)
Qualifications of Individuals Who Perform Reevaluations
(of Level of Care)
Quality Improvement: Administrative Authority
Quality Improvement: Level of Care
Quality Improvement: Qualified Providers
Quality Improvement: Service Plans
Quality Improvement: Health and Welfare
Quality Improvement: Financial Accountability
Quality Improvement: Systems Improvement
Rate Determination Methods
Rates, Billing and Claims
Reasonable Indication of Need for Services
Reassignment of Payments to a Governmental Agency
Reevaluation Schedule (Level of Care)
Regular Post Eligibility Treatment of Income (§209b State)
Regular Post Eligibility Treatment of Income (§1634 and
SSI criteria State)
Rehabilitative Services (Coverage)
Relationship of Waiver Services to EPSDT Services
Relationship of Waiver Services to State Plan Services
Relatives/Legal Guardians (Payment for Services Furnished
by)
Renewal Applications
Request for Additional Information (RAI)
Request Information
Requesting Division Review
Requirements Concerning the Specification of the Scope of
Waiver Services
Requirements: Waiver Administration and Operations
Reserved Waiver Capacity
Residential Habilitation (Core Service Definition)
Respite Care (Core Service Definition)
Response to Critical Events or Incidents

Application
N/A
App. (Sect. 6-I)
I-3-d & I-3-e
N/A
Application
B-6-c
B-6-h

Instructions
159-160
46-47
261-262
202-203
N/A
94
97

App. A
App. B
App. C
App. D
App. G
App. I
App. H
I-2-a
I-2
B-6-a
I-3-g-i
B-6-g
B-5-c-1 or B-5c-2
B-5-b-1 or B5-b-2
N/A
N/A
N/A
C-2-e

63-64
98-99
114-115
188-189
241-242
251
243-247
252-255
252-258
92-93
263
96-97
88

N/A
N/A
App. (Sect. 1)
N/A
N/A

23
20-21
35-36
19
116-118

N/A
B-3-c
N/A
N/A
G-1

52-53
75-76
147-148
156-157
225-229

87-88
121
120-121
118-119
110-112

367
Instructions: Version 3.7 HCBS Waiver Application

Topic
Responsibility for Assessment of Performance of Contracted
and/or Local/Regional Non- State Entities (Waiver
Administration)
Responsibility for Oversight of Critical Incidents or Events
Responsibility for Performing Evaluations and
Reevaluations (of Level of Care)
Responsibility for Review of and Response to Critical
Events or Incidents
Responsibility for Service Plan Development
Restraints and Restrictive Interventions - Safeguards
Restraints or Seclusion - Safeguards
Restraints or Seclusion – State Oversight Responsibility
Restrictive Interventions
Restrictive Interventions – Safeguards Concerning Use
Restrictive Interventions – State Oversight Responsibility
Review of CMS-372(S)
Risk Assessment and Mitigation (Service Plan
Development)
Role of Local/Regional Non-State Entities
Room and Board (Exclusion from claim for FFP)
Room and Board (Exclusion from Medicaid payment)
Safeguards Concerning Restraints and Restrictive
Interventions
Safeguards Concerning the Use of Restraints or Seclusion
Safeguards Concerning the Use of Restrictive Interventions
Scheduled (Waiver) Phase-in or Phase-Out
Selection of Entrants to the Waiver
Self-Employment (Supported Employment)
Service Delivery Method (Service Specifications)
Services in Facilities Subject to §1616(e) of the Social
Security Act
Service Plan Development
Service Plan Development Process
Service Plan Development (Responsibility for)
Service Plan Development Safeguards
Service Plan Forms (Maintenance)
Service Plan Implementation and Monitoring
Service Plan Monitoring Safeguards
Service Plan (Making Subject to Medicaid Agency
Approval)
Service Plan (Requirements)
Service Plan Review and Update

Application
A-5

Instructions
61

G-1-e
B-6-b

228-229
93-94

G-1-d

227-228

D-1-a
G-2
G-2-a-i
G-2-a-ii
G-2-b
G-2-b-i
G-2-b-ii
N/A
D-1-e

179
229-237
230-231
231-232
232
232-233
233-234
30
183-184

A-4
App. (Sect. 6C)
I-5
G-2

269
229-237

G-2-a-i
G-2-b-i
B-3-d
B-3-f
N/A
C-3
C-2-c

230-231
232-233
76-78
79-80
152-156
130
107

D-1
D-1-d
D-1-a
D-1-b
D-1-i
D-2; D-2-a
D-2-b
D-1-g

178-186
182-183
179
180-181
185-186
186-187
187-188
185-185

App. (Sect. 6A)
D-1-h

60-61
45

44
185
368

Instructions: Version 3.7 HCBS Waiver Application

Topic
Service Specifications
Skilled Nursing (Core Service Definition)
Special Considerations: §1915(c) Waivers with Concurrent
Specialized Medical Equipment and Supplies (Core Service
Definition)
Specification of the Scope of Services (Requirements)
Specification of the Waiver Target Group(s)
Splitting a Waiver
Spousal Impoverishment Rules (Post-Eligibility)
State Classification (Medicaid Eligibility)
State Grievance/Complaint System
State Line of Authority for Waiver Operation
State Medicaid Agency Representative
State Medicaid Director Letters (Selected)
State Oversight Responsibility (Restraints)
State Policies Concerning Payment for Waiver Services
Furnished by Relatives/Legal Guardians
Statewideness (Waiver)
Statutory Basis and Legislative History of the HCBS Waiver
Authority
Statutory Services
Strengthening HCBS Waiver Quality Assurance/Quality
Improvement
Submission of Applications
Summary of Services Covered
Supplemental or Enhanced Payments
Supported Employed (Core Service Definition)
Supported Employment Services (Coverage)
Supporting the Participant in Service Plan Development
Supports for Participant Direction (Coverage)
Target Groups
Target Groups – Additional Criteria
Technical Assistance (CMS)
Technical Guidance Concerning Service Coverage
Termination (Waiver)
Training and Counseling Services for Unpaid Caregivers
(Core Service Definition)
Transition of Individuals Affected by Maximum Age Limit
Transition Plan

Application
C-3
N/A
N/A
N/A
N/A
B-1
N/A
B-5-g
B-4-a
F-3
A-1
App. (Sect. 7A)
N/A
G-2-a-ii
C-2-e
App. (Sect. 4C)
N/A
C-1-a
N/A
N/A
C-1; C-1-a
I-3-c
N/A
N/A
D-1-c
C-1-a
B-1-a
B-1-b
N/A
N/A
N/A
N/A
B-1-c
App.
(Attachment
#1)

Instructions
116-131
166-167
21-22
163-164
116-118
65-66
23-24
90-91
80-81
223-224
54-55
48
Attach. C
231-232
110-112
42-43
4
103
13
18-19
102-105
260-261
152-156
121-122
181-182
104
66-68
68-69
27
124-125
27-28
171
69
49-51

369
Instructions: Version 3.7 HCBS Waiver Application

Topic
Transition Services (to Facilitate Transition of
Institutionalized Persons to the Community – Coverage)
Transportation – Non-Medical (Core Service Definition)
Tribal Governments (Notice)
Type of (Waiver) Request (New, Renewal, Replacement,
Amendment)
Type of Waiver (Regular or Model)
Unduplicated Number of Participants (Participant Cap)
Use of Contracted Entities (Waiver Administration)
Use of Spousal Impoverishment Rules (Post-Eligibility)
Use of the Version 3.7 Waiver Application
Vehicle Modifications (Core Service Definition)
Verification of Provider Qualifications
Voluntary Termination of Participant Direction
Waiver Administration and Operation
Waiver Administration and Operation (Requirements)
Waiver Application Submission Requirements, Processes
and Procedures
Waiver Assurances and Other Federal Requirements
(Quality Improvement Strategy)
Waiver Capacity (Allocation by Geographic Area)
Waiver (Income and Resources for the Medically Needy)
Waiver of Comparability
Waiver of Statewideness
Waiver of Statewideness (Geographic Limitation)
Waiver of Statewideness (Limited Implementation of
Participant Direction)
Waiver Operational and Administrative Functions (Defined)
Waiver(s) Requested
Waiver Service Specifications
Waiver Target Groups
Waiver Termination
Waiver Title

Application
N/A
N/A
App. (Sect. 6J)
App. (Sect. 1C))
App. (Sect. 1D)
B-3-a; J-2-a
A-3
B-5-a
N/A
N/A
C-3
E-1-l
Appendix A
N/A
N/A

Instructions
122
162-163
47-48
35-36
36
74; 275-276
59-60
86-87
32
162
129-130
209-210
52-64
52-53
18-19

N/A

8-10

B-3-e
App. (Sect. 4B)
App. (Sect. 4A)
App. (Sect. 4C)
App. (Sect. 4C)
App. (Sect. 4C)
N/A
App. (Sect. 4)
C-3
B-1
N/A
App. (Section
1-B)

78-79
41-42
41
42-43
42
42-43
57-59
40-43
116-118
65-69
27-28
35

370
Instructions: Version 3.7 HCBS Waiver Application

File Type	application/pdf
File Title	Instructions, Technical Guide and Review Criteria V3.7
Author	Errol Blake
File Modified	2024-03-08
File Created	2024-03-08