The Centers for Medicare & Medicaid Services sent a letter to state Medicaid directors on Tuesday with revised guidance related to the penalty start date for asset transfers of Medicaid beneficiaries applying to receive home- and community-based services delivered through 1915(c) waivers, which includes some HCBS offered in assisted living communities.

CMS said it issued the revised guidance to do away with “an infinite penalty period” that inadvertently resulted following its July 27, 2006, guidance.

Under the revised interpretation of changes related to the Deficit Reduction Act of 2005, CMS said that the penalty period start date for an applicant for HCBS is no later than the point at which the applicant “would otherwise be receiving HCBS waiver coverage based on an approved application for such care but for a penalty.”

This, the agency said, would be at the point at which a state has:

  • determined that the applicant meets the financial and nonfinancial requirements for Medicaid eligibility and the level-of-care criteria for the 1915(c) waiver;
  • developed a person-centered service plan for the individual; and
  • identified an available waiver slot for his or her placement.

“The penalty period for [an HCBS] applicant begins no later than the date on which a state has confirmed that all of these requirements are met,” CMS said. “Transfers that would be subject to a penalty would be those that were made on or after the 60 months preceding this same date.”