Caregiver feeding an older adult
(Credit: Jasmin Merdan/Getty Images)

As federal officials celebrated what they called “an important milestone” in the implementation of the home- and community-based services settings final rule on Friday, some senior living industry advocates warned that the regulation may force assisted living communities to stop accepting Medicaid as a payment source, causing some residents to have to move to nursing homes or other settings.

Friday was the deadline for states to come into compliance with the participant rights and self-determination aspects of rule, which was issued in January 2014 to help ensure that beneficiaries of Medicaid-supported HCBS programs, including some older adults living in assisted living communities, have “full access to the benefits of community living” in settings that are integrated into the community rather than in institutional settings such as skilled nursing facilities. Some assisted living communities provide HCBS to their residents through Medicaid waivers.

The final rule’s original deadline for full compliance was March 17, 2019, but it was extended to March 17, 2022, and then to March 17, 2023, the latter extension due to the pandemic. Last May, the Centers for Medicare & Medicaid Services said it would grant more time for states that have approved corrective action plans to demonstrate full compliance with requirements that are directly affected by the pandemic and related workforce challenges.

The HCBS settings final rule is meant to protect beneficiaries’ autonomy to make choices and to control the decisions in their lives, including:

  • controlling personal resources; 
  • being treated with privacy, dignity, respect and freedom from coercion and restraint; 
  • deciding what and when to eat; 
  • having visitors; 
  • being able to lock doors; and 
  • having the protections of a lease or other legally enforceable agreement.

“The rule is critical to CMS’ broader efforts to expand availability and improve the quality of Medicaid-funded HCBS,” CMS said Friday in a joint statement with the Administration for Community Living.

But the regulation may have the opposite effect, LeadingAge told McKnight’s Senior Living.

That’s because, in establishing new reimbursement criteria for HCBS settings, certain settings — including locations in buildings in which inpatient institutional treatment is provided, settings in buildings on the grounds of or adjacent to a public institution, or settings that deemed to isolate individuals from the broader community — are presumed ineligible for the waiver program unless they meet a heightened standard of proof. Many assisted living providers are subject to this heightened scrutiny before CMS will sign off that their service is not delivered in an institutional setting, Mollie Gurian, LeadingAge vice president of home-based and HCBS policy, previously told McKnight’s Senior Living.

“For assisted living providers who share physical space with nursing homes, compliance with the rule will be onerous, costly, and — despite CMS’ efforts — not necessarily aligned with the needs and preferences of older adult residents,” Gurian said Friday.

“We predict an unfortunate outcome of this rule may be that assisted living facilities must stop taking Medicaid as a source of payment; as a result, residents may have to move into a different compliant Medicaid setting, which might be a nursing home,” she said. “Other free-standing assisted living providers, as well as adult day providers, may see problems with the rule’s requirements for integration, which for providers serving residents with dementia, are very challenging.”

Many states, CMS and ACL noted, are embedding the rule’s requirements into their regulations, licensing standards and oversight systems, and HCBS providers have been changing service models.

Friday, the government officials said, marked “the beginning of a new phase of implementation of the rule, requiring ongoing evaluation, monitoring and public engagement.”

For LeadingAge, Gurian said, the end of the transition period for implementation of the rule finds the organization “working with our members to ensure that compliance with the rule does not cause older adults to lose access to quality care as providers may be forced to transition their service or payment models.” The association, she added, remains “concerned.”

“Overall,” she said, “the rule takes an unfortunate one-size-fits-all approach to care that advocates have long fought against.”

CMS and ACL said Friday that “[m]ore work is still to be done to fully realize the implementation of this important regulation” and said they “remain committed to partnering with states and working with providers and stakeholders to ensure all states demonstrate full compliance with the regulation.”

Assisted living providers, the National Center for Assisted Living said in a statement to McKnight’s Senior Living, “have been steadfast in preparing for the HCBS final rule requirements and continue to work with their specific state to assure compliance or transitioning to another type of program to serve the needs of their waiver-eligible residents.” NCAL members, the association said, “are committed to providing person-centered planning, resident choice and access to the greater community, which are some of the hallmarks of the HCBS final rule.”

Corrective action plans will continue to be approved “as soon as possible” and will be posted online at, the federal agencies said.