The Home and Community-Based Settings (HCBS) Rule and "Legal Vulnerabilities": Part 1

To learn more about the 2014 HCBS rule, see the HCBS Advocacy website.

The worst thing about the 2014 Home and Community Based Services settings rule is that it allows a federal agency to substitute its opinion of where individuals with developmental disabilities should live for the judgment of the individuals themselves and their families. The Centers for Medicare and Medicaid Services (CMS) promulgated a rule that sets arbitrary limits on the settings where individuals with DD can receive services. If you or your family member fits neatly into the categories of living arrangements that CMS prefers and approves of, then the HCBS settings rule may not be an obstacle for you and may actually help. If you or your family member need or prefer to live in a situation different from what the rule allows, then you may have to settle for living in a setting not of your choosing that does not meet your needs and where the only alternative may be for you to forego HCBS Medicaid funding. For those who are satisfied with the choices the rule allows, who is to say what you need and prefer today may be different from what you need and prefer tomorrow?

In her opinion piece, "The Federal Government’s Quiet War Against Adults with Autism" from 4/9/2016, Jill Escher says it best:

“One of the most troubling aspects of the new CMS rule [is] its necessary tool of overt disability discrimination. In an unprecedented move, the government is defining where a minority (here, people with developmental disabilities) can live before they can get needed social services, and promoting the idea of maximum quotas of units available to people with developmental disabilities, even in private residences. How would a senior citizen feel if told he could not receive public assistance if the government felt he lived with too many other elderly people? Should we shut off low-income housing vouchers to African Americans if more than 25% of a property is rented to people of color? Are people with Alzheimer's being told they cannot live with ‘too many’ other people with the condition? On top of the bureaucratic shenanigans, we are also talking about rank discrimination.”

Finally, families intent on challenging the limits placed on their DD family members by the 2014 rule have received some help In the form of an eleven-page legal memorandum from the law firm of Covington & Burling LLP in Washington, D.C.,  “Legal Vulnerabilities of CMS’s Regulation of Home and Community-Based ’Settings’”. It is a fascinating document packed with information about the legal underpinnings of the system of care for people covered by so-called 1915(c) Medicaid Waivers. These waivers allow states to provide HCBS to individuals with severe disabilities who “but for” the waiver services would require the level of care provided by a hospital, nursing facility (NF), or intermediate care facility for individuals with intellectual disabilities (ICF/IID).

I hope to cover other parts of the memorandum in the future, but for now, here is the Executive Summary:

We have been asked to identify potential legal challenges to the regulations and subsequent guidance documents issued by the Department of Health and Human Services’ (HHS) Centers for Medicare & Medicaid Services (CMS) that redefine the “settings” in which individuals may live to receive certain Medicaid home- or community-based services (HCBS). Specifically, you have asked us to evaluate whether CMS can lawfully exclude individuals living in “intentional communities” designed to support individuals with disabilities from receiving Medicaid HCBS services.

We believe that both the regulations and subsequent CMS guidance can be challenged as exceeding CMS’s authority. The effect of the regulations is to limit the choices of living situations for individuals with disabilities, and to replace the preferences of individuals, families and guardians with the preferences of CMS as to which setting best suits the needs of a particular individual.

As set forth below, we believe that CMS has exceeded its statutory authority in the manner in which it has regulated HCBS settings: 

• First, Congress never intended for the Secretary to exclude settings that are not excluded by the statute. The statute itself excludes only services provided in hospitals, nursing facilities, and intermediate care facilities for individuals with intellectual disabilities (ICF/IIDs) from reimbursement under the HCBS waiver programs. Nothing in the statute gives the Secretary authority to create additional exclusions. The statute prohibits reimbursement for “room and board,” yet the new regulations and guidance extensively regulate a waiver enrollee’s living situation. 
• Second, CMS’s policy to effectively exclude individuals living in “intentional communities” is inconsistent with the text of the regulation and with the comments to the proposed regulation related to consumer choice. 
• Finally, even assuming that the regulations can be upheld as validly promulgated and consistent with the statute, CMS’s elimination of choice for waiver enrollees is in conflict with the Americans with Disabilities Act (ADA) and the Fair Housing Act. 

For all of these reasons, there is a strong basis for challenging CMS’s settings regulations and policies.