"Legal Vulnerabilities" of the 2014 HCBS Settings Rule: Part 2

In a previous post, I included the executive summary of a memo from the the law firm of Covington & Burling LLP in Washington, D.C. - “Legal Vulnerabilities of CMS’s Regulation of Home and Community-Based ’Settings’" This memo lays out in detail how the 2014 HCBS Settings rule is susceptible to a legal challenge. The Rule was written by the Centers for Medicare and Medicaid Services (CMS), the federal agency that regulates Medicaid funding for Home and Community-Based Services.

This is a PDF version of the memo that has been highlighted by the Coalition for Community Choice.

Read the Memo to see all citations to Medicaid law and relevant court cases.

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Medicaid law on 1915(c) Medicaid waivers for Home and Community-Based Services (HCBS), excludes certain settings from HCBS funding. Those settings are specifically named: Intermediate Care Facilities for the Mentally Retarded (ICF/MR) [currently referred to as ICFs for Individuals with Intellectual Disabilities (ICF/IID)], nursing facilities, and hospitals. These settings provide an “institutional” level of care that is funded and licensed by Medicaid separately from HCBS. HCBS are an alternative to this level of care, depending on the choice of the individual. HCBS pays for services for the individual, but does not pay for “room and board” (with limited exceptions).

Excerpts from the MEMO:

Congress Did Not Give CMS the Authority to Exclude Settings That Are Not Excluded By the Statute

"…Courts must 'examine the nature and scope of the authority granted by Congress to the agency,'... If Congress did not delegate authority to the agency, either expressly or by the use of ambiguous terms requiring interpretation, then the agency’s regulations exceed agency authority and are invalid. “...

“Section 1915(c), however, does not require that individuals receiving HCBS be living in any particular type of ‘setting,’ and ‘where Congress includes particular language in one section of a statute but omits it in another . . . , it is generally presumed that Congress acts intentionally and purposely in the disparate inclusion or exclusion.’…"

[Services vs. Settings]

"Presumably, in regulating home- and community-based settings, CMS is relying on its authority to define home- and community-based services. The statute directly gives the Secretary the authority to define services, by repeated references to such services ‘as the Secretary shall approve.’ However, the settings rule does not define the services provided under the waiver, but instead identifies (and limits) the individuals who may receive Medicaid-funded service, based on where they live. In fact, in the ANPRM [a 2009 “Advanced Notice of Proposed Rule Making”], CMS expressly acknowledged that it tried to regulate settings through the definition of HCB services, and was unsuccessful. "

…”The statute does not support an inference that Congress intended to delegate authority to CMS to regulate an individual’s living situation (other than through the three excluded institutions).  That is because Congress largely excludes ‘room and board’ from the definition of home and community based services, with a limited exception for costs attributable to an unrelated personal caregiver who is residing in the same household.  Yet, limiting Section 1915(c) services to individuals living in certain settings directly regulates ‘room and board.’…."

“Finally, CMS’s regulation of settings is inconsistent with Section 1915(c)’s goal to promote individual choice, see § 1915(c)(2)(C)…."

 “…Congress did not delegate authority to the Secretary to limit the individuals receiving HCBS to those living in settings approved by the CMS.”