New Guidance for CMS Rules on Hospice, Home-Based Services

The U.S. Centers for Medicare & Medicaid Services (CMS) will presume that private residences in which Medicaid recipients receive hospice care and certain other services are in compliance with regulatory criteria for home- and community-based settings.

In a letter to state Medicaid directors CMS Administrator Seema Verma issued new regulatory guidance on how CMS will interpret and enforce a Jan. 2014 final rule on home and community-based services.

“Even well-intentioned policies from Washington often lack the flexibility needed to work for every state, community, setting or family,” Verma. “The implementing guidance issued under the prior administration was simply too prescriptive and unfairly singled out certain settings, causing unnecessary anxiety for many beneficiaries, families, and providers. We believe our revised guidance strikes the appropriate balance to protect individual choice while maintaining the integrity of home and community-based funding.”


Central to the guidance was the question of which settings qualify as home- or community-based and which the agency considers institutional. An institutional setting would meet any of the following criteria:

  • Settings that are located in a building that is also a publicly or privately operated facility that provides inpatient institutional treatment
  • Settings that are in a building located on the grounds of, or immediately adjacent to, a public institution
  • Any other settings that have the effect of isolating individuals receiving Medicaid home and community-based services from the broader community of individuals not receiving Medicaid HCBS

Patients are considered isolated if the setting provides them with limited opportunities for interaction in and with the broader community, restrict beneficiary choice to receive services or engage in activities outside of the setting, as well as settings that are physically located separate and apart from the broader community would also be considered isolating.

Regulations require organizations that meet the above criteria to request a heightened scrutiny review in order to receive reimbursement through a home- and community-based services program.


The new guidance supersedes any previous guidance from CMS on these rules, except where otherwise noted. It came after 18 months of discussions with a work group representing state governments, health care providers, and advocacy groups who voiced concerns that the original 2014 guidance was too prescriptive and resulted in the exclusion of many beneficiaries needing services, according to CMS.

The 2014 regulation gave states three years to develop a transition plan to ensure that all settings to which the rule applies met federal standards. CMS in 2017 extended the transition period, giving states until March 2022 to demonstrate compliance.

In addition to hospice care, home- and community-based services rules apply to home health care, durable medical equipment, caregiver and client training, personal care, health promotion and disease prevention, among others.