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New Guidance on Heightened Scrutiny Review of Newly-Constructed Presumptively Institutional Settings

The Centers for Medicare & Medicaid Services (CMS) has provided clarifications to questions about the heightened scrutiny process for newly-constructed presumptively institutional settings. The information can be found in the Informational Bulletin issued last week. 

The Bulletin revises the guidance first issued in 2016, changing the ability to demonstrate compliance with the HCBS Settings Rule based on the experience of non-Medicaid beneficiaries. Previous guidance stated that for settings under development or new construction, CMS would only be able to determine whether a setting overcame its institutional presumption after the setting was operational and occupied by Medicaid beneficiaries who were receiving services in the setting.  

A state is now allowed to submit a setting to CMS for a heightened scrutiny review while only non-Medicaid beneficiaries are receiving services in the new setting. 

The bulletin clarifies two issues:

  • With respect to newly constructed facilities, CMS can perform a heightened scrutiny review based on how non-Medicaid beneficiaries are receiving services in the new setting at the time a state conducts and submits information for a heightened scrutiny review.
  • Should CMS determine that a new presumptively institutional setting overcomes that presumption and adheres to the home and community-based settings criteria, Federal Financial Participation for Medicaid-funded HCBS will be available. Timelines are included for several scenarios.

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