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Daily Rules, Proposed Rules, and Notices of the Federal Government

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Part 441

[CMS-2229-F]

RIN 0938-AO52

Medicaid Program; Self-Directed Personal Assistance Services Program State Plan Option (Cash and Counseling)

AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Final rule.
SUMMARY: This final rule provides guidance to States that want to administer self-directed personal assistance services through their State Plans, as authorized by the Deficit Reduction Act of 2005. The State plan option allows beneficiaries, through an approved self-directed services plan and budget, to purchase personal assistance services. The rule also provides guidance to ensure beneficiary health and welfare and financial accountability of the State Plan option.
DATES: Effective date:November 3, 2008.
FOR FURTHER INFORMATION CONTACT: Marguerite Schervish, (410) 786-7200.
SUPPLEMENTARY INFORMATION:

I. Background A. Section 6087 of the Deficit Reduction Act of 2005

The Deficit Reduction Act (DRA) of 2005 was enacted into law on February 8, 2006 (Pub. L. 109-171). Section 6087 of the DRA provided for a new State Plan option that is built on the experiences and lessons learned from the disability rights movement and States that pioneered self-direction programs. Self-direction is an important component of independence, as it promotes quality, access, and choice.

Specifically, section 6087 of the DRA amended section 1915 of the Social Security Act (the Act) to add new paragraph (j). Section 1915(j)(1) of the Act would allow a State the option to provide, as “medical assistance,” payment for part or all of the cost of self-directed personal assistance services (PAS) provided pursuant to a written plan of care to individuals for whom there has been a determination that, but for the provision of such services, the individuals would require and receive State Plan personal care services, or section 1915(c) home and community-based waiver services. Section 1915(j)(1) of the Act also expressly excludes Medicaid payment for room and board. Finally, section 1915(j)(1) of the Act requires that self-directed PAS may not be provided to individuals who reside in a home or property that is owned, operated, or controlled by a provider of services, not related by blood or marriage.

Section 1915(j)(2) of the Act sets forth five assurances that States must provide in order for the Secretary to approve self-directed PAS under this State Plan option. First, States must assure that necessary safeguards are in place to protect the health and welfare of individuals provided services under this State Plan option, and to assure the financial accountability for funds expended with respect to such services. Second, States must assure the provision of an evaluation of the need for State Plan personal care services, or personal services under a section 1915(c) waiver. Third, States must assure that individuals who are likely to require State Plan personal care services, or section 1915(c) waiver services, are informed of the feasible alternatives to the self-directed PAS State Plan option (if available) such as personal care under the regular State Plan option or personal assistance services under a section 1915(c) waiver program. Fourth, States must assure that they provide a support system that ensures that participants in the self-directed PAS program are appropriately assessed and counseled prior to enrollment and are able to manage their budgets. Fifth, States must assure that they will provide to the Secretary an annual report on the number of individuals served under the State Plan option and the total expenditures on their behalf in the aggregate. States must also provide an evaluation of the overall impact of this new option on the health and welfare of participating individuals compared to non-participants every 3 years.

Section 1915(j)(3) of the Act indicates that States that offer self-directed PAS under this State Plan option are not subject to the statewideness and comparability requirements of the Act. Section 1915(j)(4)(A) of the Act defines self-directed PAS to mean personal care and related services under the State Plan, or home and community-based waiver services under a section 1915(c) waiver, provided to a participant eligible under this self-directed PAS State Plan option. Furthermore, the statute states that within an approved self-directed services plan and budget, individuals can purchase personal assistance and related services and hire, fire, supervise, and manage the individuals providing such services.

Section 1915(j)(4)(B) of the Act gives States the option to permit participants to hire any individual capable of providing the assigned tasks, including legally liable relatives, as paid providers of the services. The statute also gives States the option to permit participants to purchase items that increase independence or substitute for human assistance to the extent that expenditures would otherwise be made for the human assistance.

Section 1915(j)(5) of the Act sets forth the requirements for an “approved self-directed services plan and budget.” Section 1915(j)(5)(A) of the Act authorizes the individual or a defined representative to exercise choice and control over the budget, planning, and purchase of self-directed PAS, including the amount, duration, scope, provider, and location of service provision. Section 1915(j)(5)(B) of the Act requires an assessment of participants' needs, strengths, and preferences for PAS. Section 1915(j)(5)(C) of the Act requires States to develop a service plan based on the assessment of need using a person-centered planning process. Section 1915(j)(5)(D) of the Act requires States to develop and approve a budget for participants' services and supports based on the assessment of need and service plan and on a methodology that uses valid, reliable cost data, is open to public inspection, and includes a calculation of the expected cost of such services if those services were not self-directed. The budget may not restrict access to other medically necessary care and services furnished under the State Plan and approved by the State but not included in the budget.

Section 1915(j)(5)(E) of the Act requires that there are appropriate quality assurance and risk management techniques used in establishing and implementing the service plan and budget that recognize the roles and responsibilities in obtaining services in a self-directed manner and assure the appropriateness of such plan and budget based upon the participant's resources and capabilities.

Section 1915(j)(6) of the Act indicates that States may employ a financial management entity to make payments to providers, track costs, and make reports. Payment for the activities of the financial management entity shall be at the administrative rate established in section 1903(a) of the Act.

Note:

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

B. History of Self-Direction

The Independent Living movement in the 1960s was premised on the concept that people with disabilities should have the same civil rights, options, and control over choices in their own lives as do people without disabilities, and that individuals with cognitive impairments should not be prohibited from exercising control over their lives. One mechanism that allows individuals to exercise more involvement, control, and choice over their lives is self-directed care. Self-directed care is a service delivery mechanism that empowers individuals with the opportunity to select, direct, and manage their needed services and supports identified in an individualized service plan and budget plan. Self-direction is not a service, but rather an alternative to the traditional service delivery model whereby a worker hired by the Medicaid recipient will furnish the Medicaid service to the Medicaid recipient and the Medicaid recipient retains the control and authority over who provides the services, how the services are provided, the hours they work, and their rate of pay.

Two national pilot projects demonstrated the success of self-directed care. During the mid-1990s, the Robert Wood Johnson Foundation awarded grants to develop self-determination in 19 States. These projects primarily evolved into Medicaid-funded programs under the section 1915(c) home and community-based services waiver authority. In the late 1990s, the Robert Wood Johnson Foundation again awarded grants to develop the “Cash & Counseling” national demonstration and evaluation project in three States. These projects evolved into demonstration programs under the section 1115 authority of the Act.

Evaluations were conducted in both of these national projects. Results in both projects were similar—persons directing their personal care experienced fewer unnecessary institutional placements, experienced higher levels of satisfaction, had fewer unmet needs, experienced higher continuity of care because of less worker turnover, and maximized the efficient use of community services and supports.

On February 1, 2001, the President announced theNew Freedom Initiative, which included the following three elements: promoting full access to community life through efforts to implement the Supreme Court's decision inOlmsteadv.L.C., 527 U.S. 581 (1999) (“Olmstead”), integrating Americans with disabilities into the workforce with programs under the Ticket to Work and Work Incentives Improvement Act of 1999 (TWWIIA) (Pub. L. 106-170, enacted on December 19, 1999), and creating the National Commission on Mental Health. The President subsequently expanded this initiative throughExecutive Order 13217(June 18, 2001) by directing Federal agencies to work together to “tear down the barriers” to community living by developing a government-wide framework for providing elders and people with disabilities the supports necessary to learn and develop skills, engage in productive work, choose where to live, and fully participate in community life.

On May 9, 2002, as part of its response to theNew Freedom Initiative, the Department of Health and Human Services unveiled theIndependence Plustemplates and the initiative to help States broaden their ability to offer individuals the opportunity to maximize choice and control over services in their own homes and communities. The Department developed two templates that allowed States to choose different self-directed design features to satisfy their unique programs. The section 1115 demonstration template was developed for States that wanted to permit individuals to receive a prospective cash allowance equivalent to the amount of their Medicaid personal care benefit. Under the section 1115 authority, individuals could directly manage their cash allowance and direct the purchases of their personal care and related services and goods. For those States not wanting to offer the cash allowance, a section 1915(c) home and community-based services waiver template was developed. The section 1915(c) waiver template allowed Medicaid recipients to self-direct a wide array of services, so long as these services are required to keep a person from being institutionalized in a hospital, nursing facility or intermediate care facility for the mentally retarded (ICF-MR).

However, a program was only given theIndependence Plusdesignation when a State demonstrated a strong commitment to self-direction by developing a comprehensive program that offered a person-centered planning process, individualized budgeting, self-directed supports including financial management services, and a quality assurance and improvement plan. The intended purposes of theIndependence PlusInitiative were to:

• Delay or avoid institutional or other high cost out-of-home placement by strengthening supports to individuals or families.

• Recognize the essential role of the individual or family in the planning and purchasing of health care supports and services by providing individual or family control over an agreed upon resource amount.

• Encourage cost effective decision-making in the purchase of supports and services.

• Increase individual or family satisfaction through the promotion of self-direction, control, and choice—a major theme expressed during the New Freedom Initiative—National Listening Session.

• Promote solutions to the problem of worker availability.

• Provide supports including financial management services to support and sustain individuals or families as they direct their own services.

• Assist States with meeting their legal obligations under the Americans with Disabilities Act (ADA) and the U.S. Supreme Court'sOlmsteaddecision.

• Provide flexibility for States seeking to increase the opportunities afforded individuals and families in deciding how best to enlist or sustain home and community services.

A new section 1915(c) waiver application was also developed effective spring 2005 that incorporates our requirements for anIndependence Plusprogram.

In 2003 we awarded 12 systems change grants to States for the development ofIndependence Plusprograms. On October 7, 2004, the Robert Wood Johnson Foundation awarded a second round of “Cash & Counseling” grants to 11 States to developIndependence Plusprograms using either the section 1915(c) waiver or section 1115 demonstration application. As of March 20, 2006, 15 States had 17 approvedIndependence Plusprograms. In addition, there were 2 other States that included self-direction options in their section 1115 demonstrations and a multitude of States that offered self-directed program options in their section 1915(c) home and community-based services waiver programs.

This final rule finalizes provisions set forth in the January 18, 2008 proposed rule.

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

We received a total of 55 timely comments from home care agencies and provider associations, State Medicaid directors, home care providers, unions, beneficiaries, and other individuals andprofessional associations. The comments ranged from general support or opposition to the proposed provisions to very specific questions and detailed comments regarding the proposed changes. A summary of our proposals, the public comments, and our responses are set forth below.

General

Comment:Several commenters expressed support for the rule and the options, rights, support, and safeguards the provisions gave to participants. One commenter was appreciative of the possibility to be able to hire a caregiver of her own choosing. Another commenter stated that her “hard to serve” clients were satisfied with hiring persons of their choosing and that another client was able to get more hours of “flexible” care to fit her individualized needs and wishes.

Response:We appreciate the perspectives these commenters had in support of the rule.

Comment:Several commenters indicated opposition to the self-directed service delivery model. Some commenters stated that the model was not appropriate for most Medicaid beneficiaries. Other commenters were concerned that under the self-directed delivery model, caregivers were inadequately trained, that there was insufficient oversight of the care being provided beneficiaries, and that the potential for fraud, abuse, neglect, and exploitation increased.

Response:We disagree that the self-directed service delivery model is an inappropriate model. Our experience with programs that offer self-direction in section 1915(c), home and community-based services waiver programs and section 1115 demonstration programs, has confirmed the positive results found in the formal evaluation of the “Self-Determination” and “Cash & Counseling” projects. These programs successfully offered the self-directed service delivery model to children, older persons, and persons with cognitive impairments, developmental disabilities, and mental health needs. This final rule requires numerous participant safeguards, including the requirement for a support system that provides information about self-direction, as well as any counseling, training and assistance that may be needed or desired by participants to effectively manage their services and budgets. Key components of the support system are the support brokers and consultants who help participants perform tasks (for example, locating and accessing needed services, developing a service budget plan, and monitoring the beneficiary's management of the PAS and budget). Additionally, the support system includes financial management services entities that perform, or assist participant beneficiaries who have elected the cash option to perform, the employer-related and tax responsibilities. States may also add other activities that they deem necessary or appropriate in their support systems.

Other participant protections include requirements for an assessment of the individual's needs, strengths, and preferences for self-directed PAS; the use of a representative when needed; a person-centered planning process that engages the individual and also involves the individual's family, friends, and professionals in the planning or delivery of services or supports; a quality assurance and improvement plan; and individualized backup plans that address critical contingencies or incidents that would pose a risk of harm to the participant's health and welfare. We also require that States have in place a risk management system that identifies potential risks to the participant and employs tools or instruments (for example, criminal and worker background checks) to mitigate risks. The statute and this final rule further require States to assure that necessary safeguards have been taken to protect the health and welfare of individuals furnished services under this program and to assure financial accountability for the funds expended for self-directed services.

Comment:Some commenters requested clarification about the impact of funds paid to legally liable relatives, including a parent-caregiver, on the individual's or family's resources for other public benefit programs. The commenters urged that CMS work with other Federal partners to ensure that the receipt of cash would not jeopardize other public benefit programs and that we work to enact needed changes through legislation.

Response:The scope of this regulation does not extend to the impact of funds paid to legally liable relatives on their receipt of public benefits. However, we will take under advisement the suggestion of working with other agencies to address the impact of the cash option on the receipt of other public benefits.

Comment:One commenter sought clarification on whether CMS will require a State that has already implemented elements of self-direction under its State plan and waivers to modify these existing programs or submit a State plan amendment in compliance with the new rule. This same commenter sought clarification on whether the section 1915(j) option would be the exclusive authority for self-directed services or whether States may pursue or rely on other Medicaid authorities.

Response:We have not required and do not intend to require any State to submit a section 1915(j) State plan amendment, nor is the section 1915(j) opportunity the exclusive opportunity for a State to pursue the self-directed service delivery model. States are free to use some, all, or none of the appropriate Medicaid authorities that are available for use of the self-directed service delivery model.

Comment:One commenter requested clarification on the impact of the rule on a participant's eligibility for self-directed PAS, generally focusing on the interaction with a section 1915(c) waiver program. The commenter requested clarification on the following:

(1) Whether a participant may receive a budget for self-directed PAS and concurrently receive waiver services, or whether States may limit or deny access to waiver services.

(2) Whether waiver recipients who elect the self-directed PAS service option are considered enrolled in the waiver, and whether waiver “slots” must be set aside for persons who may disenroll from the option.

(3) Whether CMS intends to allow States to cover services beyond personal care and items that increase independence or substitute for human assistance.

(4) Whether individuals who are eligible for section 1915(c) waiver services under the special income group may be eligible for the self-directed PAS State plan option.

(5) Whether the individual would have to maintain enrollment in a waiver and what threshold is required to maintain that enrollment (for example, meeting the level of care criteria, having a plan of care, or receiving a waiver service on a periodic basis).

Response:Our response follows the order of the commenter's questions as noted above.

(1) It is permissible for an individual to participate in the self-directed PAS State plan option and concurrently receive services under a section 1915(c) waiver program as a State can select which of the section 1915(c) waiver services participants will have the opportunity to self-direct. It is not permissible to limit or deny a participant the other section 1915(c) waiver services for which the participant is eligible but not self-directing. Specifically, 42 CFR 441.472(d) requires that the “budget may not restrict access to othermedically-necessary care and services furnished under the plan and approved by the State but not included in the budget.”

(2) Participants who elect the self-directed PAS State plan option may remain “enrolled” in their section 1915(c) waiver program and their so-called “slots” must be kept available in the event the participant voluntarily disenrolls or is involuntarily disenrolled from the self-directed PAS State plan option.

(3) When a State offers the opportunity to self-direct State plan personal care services (PCS), we do not believe it would be permissible for participants to purchase services that are not included within the State's definition of its PCS benefit. However, we recognize that both the statute and regulation at § 441.470(d) allow a State, at the State's election, to offer participants the opportunity to reserve funds to purchase items that increase independence or substitute for human assistance, to the extent that expenditures would otherwise be made for human assistance, including additional goods, supports, services, or supplies. We intend to issue further guidance on the criteria for permissible purchases to assist States in deciding the scope of the permissible purchases in their self-direction programs. We believe that, at a minimum, the permissible purchase must relate to a need or goal identified in the service plan.

(4) Individuals who are eligible for section 1915(c) home and community-based waiver services under the special income group may be eligible for the self-directed PAS State plan option.

(5) A participant would have to maintain all eligibility, level of care, and other requirements for the section 1915(c) waiver program. If, upon reassessment, a participant would no longer be eligible for the section 1915(c) waiver services through which the participant was able to self-direct their PAS, then the participant would no longer be able to self-direct their PAS under this State plan option.

Comment:Some commenters stated that they believe that the self-directed service delivery model would reduce the viability of agencies that deliver traditional agency-delivered services especially in rural or difficult to serve areas, would force individuals into a more expensive option, such as a skilled nursing facility (SNF) or hospital, and would delay hospital discharges and would force more agencies to only serve private pay clients.

Response:The evaluations conducted on the “Self-Determination” and the “Cash & Counseling” national projects have provided evidence of consumer satisfaction and quality of care. In addition, our experience with the section 1115 demonstration and section 1915(c) waiver programs has not shown this impact on traditional agency-delivered services. Therefore, we do not believe that the consequences noted in the comments regarding the self-directed service delivery model are necessarily predicted outcomes.

Comment:One commenter disagreed that the self-directed service delivery model costs less than traditional agency-delivered services.

Response:We have not asserted that the self-directed PAS State plan option costs less than the traditional agency-delivered service model. Two national pilot projects demonstrated the success of the self-directed service delivery model. The “Self-Determination” and the “Cash & Counseling” national projects were evaluated in a scientifically designed study. The evaluation results of those projects were similar and concluded that persons directing their personal care experienced fewer unnecessary institutional placements; experienced higher levels of satisfaction; had fewer unmet needs; experienced higher continuity of care because of less worker turnover; and maximized the efficient use of community services and supports. The results did not necessarily confirm that self-directed care costs less. For example, the results in the “Cash & Counseling” States indicated that Medicaid personal care costs were somewhat higher under “Cash & Counseling”, mainly because enrollees received more of the care they were authorized to receive, as compared to the services delivered under the traditional agency model. Another finding was that increased Medicaid personal care costs under “Cash & Counseling” were partially offset by savings in institutional and other long-term-care costs. Furthermore, the findings also suggested that “Cash & Counseling” need not cost more than traditional programs if states carefully design and monitor their programs. For example, States could design their “Cash & Counseling” programs so that the cost per month is budgeted to match the cost per month of its traditional system, assuming that home care agencies will fully meet their care obligations. If the traditional system delivers the services beneficiaries are authorized to receive, there should be no difference in planned costs.

Comment:Two commenters expressed concern that the proposed rule added too many additional administrative requirements that would be burdensome or costly to States. One commenter thought that the rule would eliminate the efficiencies intended by the Congress.

Response:We acknowledge that States that have not yet developed the infrastructure necessary to support the self-directed service delivery model, in particular developing a support system, may experience higher initial administrative burdens and costs when designing their self-directed PAS programs. Regardless of whether a State uses its self-directed PAS State plan option, a section 1915(c) home and community-based services waiver option, or a section 1915(i) home and community-based services State plan option to offer the self-directed service delivery model, there will be administrative and support system requirements, and State Medicaid agencies must exercise administrative and oversight functions over their Medicaid programs.

Basis, Scope & Definitions (§ 441.450)

We proposed to implement section 1915(j) of the Social Security Act (the Act) concerning the self-directed PAS option through a State plan. We proposed that individuals who self-direct their PAS under this option have the decision-making authority to identify, access, manage, and purchase their PAS including a proposed list of minimum activities over which the individuals may exercise decision-making authority. We proposed several definitions specific to the self-directed PAS State plan option.

Comment:One commenter recommended that CMS add a reference to “or their representative(s)” whenever the rule refers to individuals or participants.

Response:We agree with the comment because the use of a representative to assist the individual or participant in exercising their decision-making authority is consistent with the self-directed service delivery model. Accordingly, we have revised the part 441, subpart J in relevant places by adding “or their representatives” when we refer to “individuals” or “participants.”

Comment:A few commenters suggested that CMS add “training” of the PAS providers to the list of items subject to the participant's authority in § 441.450(b) and that participants have access to training provided by or through the State.

Response:We agree with the comment about adding “training” to the list of items subject to the participant's authority because the ability of aparticipant to train the provider of their PAS in the participant's needs and in a manner that comports with the participant's preferences is crucial to the self-directed service delivery model. Accordingly, we have revised the authority provision at § 441.450(b)(4) to expressly include the ability of the participant to train their workers. We also believe that there are circumstances in which participants may desire that their PAS providers secure additional training beyond what the participants can provide. Accordingly, we have further revised the authority provision at § 441.450(b)(4) to permit participants to have access to other training provided by or through the State so that their PAS providers can meet any additional qualifications that participants think their providers may need.

Comment:Some commenters thought that § 441.450(b) should be revised to include the ability of the participant to select his or her own financial management services (FMS) entity and his or her own supports brokers or consultant.

Response:We believe that the services of the FMS entities are administrative functions and that States have the authority to determine whether or not to limit the FMS entities that will provide the FMS functions. We believe that the functions of a supports broker or consultant comprise a service that is unique to this State plan option and, as such, recognize that States would want to be able to claim Federal medical assistance percentages (FMAP) for this service. The supports broker or consultant performs a variety of key functions that include the provision of information, counseling, training and assistance, or helping participants access needed information, counseling, training and assistance to help participants effectively manage their PAS. Typically, they may assist participants in locating and accessing needed services, developing service budget plans and helping participants to fulfill their roles and responsibilities as an employer. Based on our experience with self-direction programs under section 1115 demonstrations or section 1915(c) waiver programs, we have learned that participants desired the opportunity to select a different supports broker or consultant if the relationship between an assigned supports broker or consultant and the participant was not satisfactory. We have revised the rule at § 441.450(c) to add a definition for “supports broker” or “consultant.” Further detail on the definition is provided in response to another comment.

Comment:Some commenters expressed disagreement with the requirement that participants are allowed to determine the amount paid for a service, support, or item stating that a State law or collective bargaining agreement could conflict with this authority. One commenter thought that this requirement was inconsistent with the statutory language and congressional intent and would deprive States of their “traditional wage standard-setting role.” Another commenter asked for clarification on how the requirement comports with State plan rate-setting requirements, including the requirement that there must be public notice of any significant proposed change in methods and standards for setting payment rates.

Response:We believe that the statutory authority contemplates including participants in the decision-making authority over the amount paid for a service, support or item. We believe that only a few States have actually set the precise wages for participants of self-direction programs. Indeed, we believe that most States reimburse varying amounts even for services provided by traditional service models. We further note that the requirement for public notice applies to rates paid by the Medicaid agency for services. In the case of self-directed services, it would be the budget amount upon which Medicaid reimbursement would be based. The rate that the participant pays their provider of PAS from the available budgeted amount is outside the scope of the requirement for public notice of Medicaid rate setting.

Comment:One commenter was confused about the apparent multiple meanings for the word “support” or “supports.” The commenter suggested that we amend the rule to clarify that the State has the discretion to limit supports that are beyond the State's obligation, such as repeated counseling, training, and assistance sessions.

Response:To clarify, in the context of self-directed PAS, “supports” generally means a service or item that a participant can purchase and “support” generally means the information, counseling, training, or assistance provided under the support system, including that provided by a support broker or consultant. We disagree that the regulation needs further amending to allow the State to provide limits to the PAS supports. If participants demonstrate that they cannot effectively manage their PAS or budgets, the rule provides States with options such as offering additional assistance, including FMS; mandating the use of a representative; or involuntarily disenrolling a participant from the self-directed PAS option.

Comment:One commenter requested clarification about how the requirement that States have a mechanism that satisfies the Medicaid requirements on provider agreements would apply when vendors furnish items and supplies. It is unclear who the “enrolled provider” is when services, items, or supplies are purchased with cash.

Response:As self-directed PAS is not “cash assistance” but rather is a service delivery model, the requirements on provider agreements at section 1902(a)(27) of the Act would not be a barrier if a State elected the cash option.

Comment:One commenter thought the definition of “assessment of need” was too vague. The commenter recommended use of a standardized assessment instrument.

Response:We believe the definition of “assessment of need” is adequate. We acknowledge that a standardized assessment instrument could lead to more uniformity in determining an individual's PAS needs and encourage their use where possible. However, it may not be useful in determining the strengths, personal goals, and preferences of the individual for PAS which is essential in a self-directed service delivery model. Accordingly, we are not amending the definition of “assessment of need” to require States to use a standardized assessment instrument, but recognize a State may nonetheless choose to do so.

Comment:Some commenters suggested language to be included in the definition of “individualized backup plans.” The recommended language included additional language for the following areas: respecting the individual's choices and preferences, planning for emergency preparedness, and a State assessment of worker shortage that could possibly impact the ability of an agency to provide back-up care, and if a shortage exists, require that the individual cannot enroll unless a backup plan can be developed that relies on family, personal, and available community services.

Response:We agree with the comment that an individualized backup plan has to respect the individual's choices and preferences and not substitute the individual's choices with those of others who may be participating in the development of the backup plan. We believe that this is consistent with the “dignity of risk” concept that recognizes as individuals experience greater choice and control, they may also desire to assume more of the responsibilities and risks associated with the provision of their PAS. Theindividualized backup plan is related to the provisions of the rule at § 441.476 on risk management and should occur as part of the discussion about the risks an individual is willing and able to assume. As it is of utmost importance that the backup plan is individually tailored to the individual's needs and preferences, we believe that a State or regional approach that treats all participants' contingencies the same by imposing a requirement that participants should simply contact 911 emergency services in the event of a critical contingency or incident, is not a sufficiently individualized backup plan. We have revised the definition of “individualized backup plan” in § 441.450(c) to clarify that the individualized backup plan must demonstrate an interface with the risk management provision at § 441.476 which requires States to assess and identify the potential risks to the participant (such as any critical health needs), and ensure that the risks and how they will be managed are the result of discussion and negotiation among persons involved in the service plan development. We have also revised the definition to include that the backup plan must be individualized as well as not include a 911 emergency system or other emergency system as the sole backup feature of the plan.

We also agree that emergency preparedness may be a part of the individualized backup planning; however, we must stress that these two things are not the same. We view “emergency preparedness” as addressing the contingency of a natural disaster or other similar catastrophic disaster and planning for how the participant will be secured or evacuated to safety. We view the “individualized backup plan” as a much broader participant protection than emergency preparedness. We view the individualized backup plan as a cornerstone to self-directed PAS because it sets forth the participant's wishes in a critical contingency or incident that would pose a risk of harm to the participant's health or welfare. While “emergency preparedness” can be part of an individualized backup plan, we do not believe additional language is necessary for it to be included.

We disagree with the comment that individuals should not be permitted to enroll in the self-directed PAS State plan option if an individualized backup plan cannot be developed which relies on family, personal, and available community services. While we are aware that some individuals who select the self-directed State plan option will not have access to family and personal resources or to community resources, in these instances, the supports broker or consultant would help the individual locate and access the providers of PAS needed by the individual. If, after reasonable effort by the supports broker or consultant, it is not possible to locate providers of PAS suitable to the individual, then it would be permissible to delay the individual's enrollment in the self-directed PAS option until such time as suitable providers of their PAS can be found. We do not believe that the definition of “individualized backup plan” needs to be revised to reflect this procedure because the definition of “supports broker or consultant” indicates that one of the roles of the supports broker or consultant is to help an individual locate and access needed PAS, if necessary.

Comment:We invited comments on other possible relationships that could be included within the definition of “legally liable relatives” (LLRs). One commenter thought that “significant others” should be included in the definition. Some commenters suggested that we amend the rule to include provider training requirements and other safeguards. Another commenter suggested that we amend the regulation to require States to have a mechanism to deal with situations in which participants may be pressured to hire a family member or friend or are having difficulty discharging a family member or friend.

Response:We disagree that the definition should be revised to include “significant others.” We believe it is up to the States to determine what relationships they include in their definition of “legally liable relatives”. We also disagree that the regulation should be revised to specify certain safeguards, such as minimum training requirements, competency evaluations, criminal background checks, or other modifications to ensure that PAS workers, including LLRs, are properly trained and qualified to perform the functions of their jobs. One of the most valued aspects of a self-directed program is that participants have the authority to train their providers of PAS in what they need and how to deliver the PAS in accordance with their personal, cultural, and religious preferences. As noted previously, we have revised the regulation at § 441.450 to permit participants to have access to other training provided by or through the State so that their PAS providers can meet any additional qualifications that participants think are needed or desired. Accordingly, we do not believe that the rule needs to be revised to specify provider training requirements as this will vary from participant to participant. We further do not believe that the regulations need to be revised to require that States have a mechanism to deal with situations in which participants may be pressured to hire a family member or friend or where they are having difficulty discharging a family member or friend. The role of the supports broker or consultant is to assist the participant in managing their PAS and budget plans, including how to hire the person most suitable to the participant, and how to discharge the worker if necessary. Finally, as noted above, we do not believe the regulation needs to be revised to add more safeguards to detect whether needed services are actually being provided. We believe that the regulation provides sufficient participant protections to detect whether needed services are actually being provided. It is CMS' expectation that participants' services and budget plans will be monitored by supports brokers or consultants; that the FMS entities, as required in the rule, will report any irregularities detected to participants and States; and that the State Medicaid agency will exercise ongoing oversight and monitoring of the provision of PAS through its Quality Assurance and Improvement Plan and remediate any problematic issues for participants.

Comment:One commenter noted that the definition of “self-direction” did not acknowledge that participants who self-direct their PAS must have the ability to perform the required roles and responsibilities. Another commenter sought further clarification of the definition of “self-direction.” The commenter stated that a clarification may be needed to ensure that the maximum amount and scope of a person's budget will not exceed the level of services determined by the assessment or the budget established by the valid budget methodology.

Response:The self-directed service delivery model does not presume who can and cannot self-direct their PAS. Instead, the model requires that the participant is assessed for their need for PAS, and furnished the necessary information, counseling, training, and assistance so that the participant can manage his services and budget. In addition to the support system, the regulations provide several other mechanisms that enable participants to manage their services and budgets such as the use of a representative to assist the participant to exercise his decision-making authority over the services and budget. If a participant is no longer able or willing to self-direct their PAS, theState is allowed to require additional assistance for the participant, mandate the use of a representative, or, if need be, involuntarily disenroll the participant. Therefore, we have not revised the regulation as we do not believe any clarification is necessary. Moreover, the regulation at § 441.470 clearly sets out the steps for determining a participant's budget amount such that we do not believe that the budget will exceed the level of needed PAS.

Comment:A few commenters had concerns about the definition of the “service plan.” One commenter suggested that the definition not require unpaid caregivers to attend the planning meeting, but instead, provide the service hours that are included in the service plan. One commenter cautioned against a reduction in the budget based on an erroneous assumption that informal support is available and another sought minimum qualifications for those responsible for development of the service plan.

Response:The definition of “service plan” permits the participant to direct the planning process, including inviting the participant's family or others of the participant's choosing to the planning meeting. This is not a requirement, however. In addition, we believe it would be inappropriate to revise the definition to require any minimum qualifications of individuals responsible for development of the service plan as States should have the flexibility to craft their own requirements. However, we acknowledge that there may be a “lead” person who will assume responsibility for assuring that the planning meetings occur and that the resultant plan meets the regulatory requirements. We would expect that this individual or individuals would minimally be familiar with person-centered and directed planning and person-centered services, and preferably possess demonstrated skill to facilitate person-centered and directed planning. We wish to clarify that our reference to persons who are “required” to attend the planning meeting was to include those persons who may be required by the State to attend the person-centered planning meeting. We did not intend to suggest that the participant should require the attendance of family, friends, or others who do not wish to participate in the meeting. Finally, we agree that the service budget should not be reduced based on an erroneous assumption about the level of service that an informal caregiver would be providing.

Comment:Two commenters indicated that the requirements for a comprehensive assessment, care planning, health and welfare assurances, and monitoring appear to meet the definition of case management as defined in section 6052 of the DRA, Optional State Plan Case Management Services. They also requested clarification on whether a participant who elects this option will be unable to receive any other type of case management covered by Medicaid. One commenter asked how States would reconcile the requirements of the self-directed PAS State plan option final rule with section 6052 of the DRA. For example, as outlined in the January 18, 2008 self-directed PAS State plan option proposed rule, CMS “requires case management services under self-directed PAS,” but the case management provision of the DRA prohibits States from requiring beneficiaries to receive case management. Furthermore, the commenter suggested that the self-directed PAS State plan option proposed rule requires “gate-keeping” and advocacy functions but the case management DRA provision requires these functions to be separated by payment source and beneficiaries to be allowed to select from all qualified providers. One commenter asked how CMS could require a case manager to monitor the participant's service plan under the self-directed PAS State plan option, if, as stated in the case management DRA provision, the State cannot bill for services defined as “case management” as administrative or other services.

Response:We believe that the functions that are required of the supports broker or consultant are not “case management” within the definition of case management provided pursuant to section 1915(g)(2) of the Act, as revised by section 6052 of the DRA. Section 1915(g)(2) of the Act defines case management services for purposes of section 1915(g) of the Act as services that will “assist individuals eligible under the State plan in gaining access to needed medical, social, educational, and other services.” Case management includes the following: Assessment of an eligible individual to determine service needs, including activities that focus on needs identification; development of a specific care plan based on the information collected through the assessment; referral and related activities to help an individual obtain needed services, including activities that help link the eligible individual with medical, social, educational providers, or to other programs and services that are capable of providing needed services; and monitoring and follow-up activities, including activities and contacts that are necessary to ensure that the care plan is effectively implemented and adequately addresses the needs of the eligible individual.

We believe that the relationship between a supports broker or consultant and a participant and the assistance provided by the supports broker or consultant in the self-directed PAS State plan option is fundamentally different than the relationship required between a case manager and beneficiary and the assistance provided by a case manager. Supports brokers or consultants are agents of the participants in that they are primarily responsible for facilitating participants' needs in a manner that comports with the participants' preferences. As the relationship that develops must be supportive and ongoing, participants may request a different supports broker or consultant if the relationship is not working out. Furthermore, the functions performed by supports brokers or consultants are unique to the self-directed service delivery model because supports brokers or consultants are primarily responsible for providing information, training, and counseling and assistance, as desired by participants, that help participants effectively manage their PAS and budgets. These functions include helping participants develop their service budget plans and fulfill their employer-related responsibilities. This assistance can also include helping participants locate and access PAS, but supports brokers or consultants do not perform assessments of need or develop care plans. Although supports brokers or consultants do perform a monitoring function for the purpose of checking whether participants' health status has changed, they are also verifying whether expenditures of funds are being made in accordance with the service budget plans.

Because of the unique position of a supports broker or consultant under the self-directed PAS State plan model, we believe that a traditional case manager can perform the functions of supports brokers or consultants only if they receive training in the self-directed service delivery model that includes a demonstrated capacity to understand that they are to assist the participants with fulfilling their preferences, and not supplant the participants' preferences with their views or preferences. As evidenced by the comment, it is important to avoid confusion between the functions of a supports broker or consultant and the services furnished by a case manager, and we believe a definition of supports broker orconsultant would clarify the functions. Accordingly, we have revised § 441.450(c) to add a definition of supports broker and consultants that reflects the unique role and functions of the supports broker or consultant; that requires States to develop a protocol to ensure that supports brokers or consultants are accessible to participants, have regularly scheduled phone and in-person contacts with participants, monitor whether participants' health status has changed and whether expenditure of funds are being made in accordance with service budget plans; and to require that supports brokers or consultants meet the training and monitoring requirements and qualifications required by their respective State. We have also added to § 441.450(c) the requirement that support brokers or consultants be available to each participant as part of the support system.

Comment:One commenter suggested that we include a definition of “person-centered services” or “person-directed planning” because it is critical that States have a uniform understanding and application of these concepts.

Response:We include in the regulations at § 441.468(b)(1) a requirement that the service planning process be “person-centered and directed” to ensure the identification of each participant's preferences, choices, and abilities, and strategies to address those preferences, choices, and abilities. We further require at § 441.468(c)(1) that the State's procedures governing service plan development allow the participant to engage in and direct the process to the extent desired, and allow the participant the opportunity to involve family, friends, and professionals. We do not believe that the regulation should be revised to add definitions of “person-centered services” or “person-directed planning,” because the intent of such processes is clear and we wish to provide flexibility in implementing the concepts. We wish to note there are numerous resources available that define “person-centered planning” and “person-centered services” to assist the States. There are also different models (for example, MAPS, PATH, ELP, Personal Futures Planning) of person-centered planning. According to one resource, (Schwartz, A.A., Jacobson, J.W., & Holburn, S. (2000)). Defining “person-centeredness”: Results of two consensus methods.Education & Training in Mental Retardation & Developmental Disabilities), each model has a different emphasis and should be applied based on the needs of the individual. Furthermore, the authors indicate that all models share a common underlying set of eight basic characteristics. These characteristics include the following:

• The person's activities, services and supports are based on his or her dreams, interests, preferences, strengths, and capacities

• The person and people important to him or her are included in planning, and have the opportunity to exercise control and make informed decisions

• The person has meaningful choices, with decisions based on his or her experiences

• The person uses, when possible, natural and community supports

• Activities, supports and services foster skills to achieve personal relationships, community inclusion, dignity, and respect

• The person's opportunities and experiences are maximized, and flexibility is enhanced within existing regulatory and funding constraints

• Planning is collaborative, recurring, and involves an ongoing commitment to the person

• The person is satisfied with his or her activities, supports and services.

Generally, any model for person-centered planning a State uses should be based on the wishes and needs of the individual. With respect to the concept of “person-directed” planning, we expect that participants will actually direct the service planning and budget development. We think this is an important aspect of person-centered planning in order to ensure that the resultant service and budget plan actively engages a participant, accurately reflects a participant's abilities, preferences, and choices, and better meets the underlying purpose of the self-directed PAS option. We are available to provide information and technical assistance to any State that desires it.

After consideration of public comments received, we are finalizing § 441.450 with revision to the definition of individualized backup plan and addition of a definition of supports broker or consultant. We have also generally added “representative” throughout the regulations, as applicable.

Self-Direction: General (§ 441.452)

We proposed that States must have in place, before electing the self-directed PAS option, personal care services through the State plan, or home and community-based services under a section 1915(c) waiver. We proposed that the State must have both traditional service delivery and the self-directed PAS service delivery option available in the event that an individual voluntarily disenrolls or is involuntarily disenrolled, from the self-directed PAS service delivery option. We also proposed that the State's assessment of an individual's needs must form the basis of the level of services for which the individual is eligible and that nothing in the self-directed PAS State plan option would be construed as affecting an individual's Medicaid eligibility, including that of an individual whose Medicaid eligibility is attained through receipt of section 1915(c) waiver services.

Comment:One commenter requested that CMS recognize other delivery models as “traditional” besides “agency-delivered” services. This same commenter asked whether a State that offers home health services under its State plan could meet the requirement for a “traditional” service-delivery model under this rule. Finally, this commenter sought clarification on whether the requirement that States offer a “non-self-directed” model refers only to the “agency-delivered” service model. Another commenter indicated that it is imperative that all participants retain the option to use the “traditional” service-delivery system.

Response:In the preamble to the proposed rule, we construed the “traditional” service-delivery model to mean “traditional agency-delivered services”,i.e., the personal care and related services and section 1915(c) waiver services that are delivered by personnel hired, supervised, and managed by a home care or similar agency. We agree with the commenters that we should not limit the “traditional” delivery system to “agency-delivered services” and now construe “traditional” delivery system to mean the delivery system that the State has in place to provide their State plan optional personal care services benefit or their section 1915(c) waiver services for individuals who are not self-directing their PAS under a section 1915(j) State plan option.

“Personal care and related services” as used in section 1915(j)(4)(A) of the Act are those services that are included in the State's definition of its optional personal care services benefit and not other State plan services such as home health. We further note section 1915(j)(2)(C) of the Act already requires that participation in the self-directed PAS State plan option is voluntary. Also, the regulation at § 441.456 permits participants to voluntarily disenroll from the self-directed PAS option. Finally, the regulation at § 441.458 allows States to involuntarily disenroll participants. In the event of a voluntary or involuntary disenrollment,participants must resume receiving traditional services to which they are eligible under the State plan personal care service benefit or a section 1915(c) waiver program.

After consideration of the public comments received, we are finalizing § 441.452 without revision.

Use of Cash (§ 441.454)

We proposed that States have the option to disburse cash prospectively to participants self-directing their PAS, and further, that States must ensure compliance with all applicable Internal Revenue Service requirements; that participants, at their option, could use the financial management entity for some or all of the functions described in § 441.484(c); and that States must make a financial management entity available to participants if they demonstrated, after additional counseling, information, training, or assistance, that they could not effectively manage the cash option.

Comment:One commenter thought that allowing individuals who choose the cash option to perform tax-related reporting functions puts the individual at risk with the Internal Revenue Service (IRS). One commenter asserted that older persons and persons with disabilities are unlikely to be able to properly manage the quarterly IRS tax payments. One commenter suggested that the rule be revised to permit the State to require a participant to use the financial management services (FMS) entity for all or part of the functions described in § 441.484(c). One commenter thought that making use of the FMS entity optional would add an additional administrative and cost burden to the States. Also, the commenter stated that it is unwise for CMS to allow the practice of the hours of needed PAS to be determined by the wage/pay needs of the provider of care rather than the hours of PAS actually needed by the individual.

Response:On September 13, 2007, we released a State Medicaid Director Letter (SMDL#07-013), with preprint, for the self-directed PAS State plan option. In the preprint, we indicate that States must assure that all IRS requirements regarding payroll/tax filing functions will be followed, including when participants perform these functions themselves. In the regulation at § 441.454, we require that States can elect to disburse cash prospectively to participants who are self-directing their PAS and must ensure compliance with the IRS requirements if they adopt this option. We have revised the regulation at § 441.454(b) to add a minimum list of the tax-related responsibilities that are required by the IRS because we believe these examples will help to illustrate some of the tax-related responsibilities that must be performed. We recognize that not all participants who select the cash option will have the interest or skill to bear these responsibilities, so the regulation at § 441.454(c) notes that participants may use a FMS entity to perform some or all of the employer and tax-related functions. We disagree that the regulation should permit the State to require a participant to use an FMS entity if that individual has selected the cash option and have not changed the rule. The purpose of the self-directed service delivery model is to vest participants with the choice and authority over decisions about their PAS and budget purchases. Therefore, when participants who have selected the cash option also choose to perform some or all of their employer and tax-related functions, we intend for that decision to be respected. Thereafter, if participa