CMS has not given a sufficient explanation here of why the agency has decided that it should restrict funding to settings with “institutional qualities” as defined by these rules and at the discretion of the Secretary of Health and Human Services.
This language is included in the proposed rules acknowledging that institutional care in nursing facilities, intermediate care facilities for the mentally retarded, hospitals for mental disease, and other hospital settings is not prohibited:
We note that this proposal in no way preempts broad Medicaid requirements, such as an individual's right to obtain services from any willing and qualified provider of a service. We further note that States are not prohibited from funding institutional care under Medicaid. The exclusion of these settings from HCBS waivers and from the State plan HCBS benefit does not limit the availability of institutional and facility-based care for those individuals who require long-term services and supports, and who freely choose to receive services in those settings…
The funding streams for institutions are different from those for HCBS waiver settings and waiver services are by definition alternatives to institutional care. There is nothing, however, in the ADA, the Olmstead decision, or Medicaid law that places restrictions on HCBS settings, based solely on an opinion that a service or setting has institutional qualities.