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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 in recent weeks.

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.

CMS has defined presumptively institutional settings are those that have at least one of the following characteristics:

  • Being co-located (in the same building) with a nursing home or similar institutional setting.
  • Being on the grounds of or adjacent to a public institution (e.g., a government-owned nursing home).
  • Having the effect of isolating individuals receiving Medicaid HCBS.

Guidance issued in 2016 stated that new construction, presumptively institutional settings could only undergo heightened scrutiny once they were operational and occupied by individuals receiving Medicaid HCBS. This new guidance changes this policy. CMS will now allow such settings to undergo heightened scrutiny based on non-Medicaid beneficiaries, including individuals paying for services privately.

The guidance also provides information on how new construction settings required to undergo heightened scrutiny can qualify for Medicaid reimbursement. In short, new construction settings that demonstrate compliance with the Settings Rule can receive reimbursement dated to when that setting complied with the Settings Rule and had Medicaid beneficiaries.

CMS provided examples of reimbursement pathways for new construction settings in its Aug. 2 guidance:

  • Example 1: A state submits to CMS a newly constructed setting in the same building as an institution providing inpatient treatment for heightened scrutiny review on July 1, 2019. The setting is furnishing services to a mixture of private-pay individuals and Medicaid beneficiaries. The state submits information to CMS about how the setting overcomes its institutional presumption and adheres to the home and community-based settings criteria based on their assessment conducted on June 1, 2019. CMS reviews the state’s submission and agrees that the setting overcomes its institutional presumption. FFP would be available for expenditures for HCBS provided by this setting on or after June 1, 2019.
  • Example 2: A state submits to CMS a newly constructed setting on the grounds of a public institution for heightened scrutiny review on July 1, 2019. The setting is furnishing services to private-pay individuals, but not yet to Medicaid beneficiaries. The state bases its description of how the setting overcomes its institutional presumption on the experience of those private-pay individuals. Medicaid beneficiaries are accepted into the setting on August 1, 2019. CMS reviews the submitted information and requests additional information of the state on September 15, 2019. That request asks the state to attest that Medicaid beneficiaries receiving services at the setting have person-centered service plans as referenced in the regulation and are experiencing the setting similarly to non-Medicaid participants consistent with the settings criteria and have access to the broader community to the degree that is outlined in their person-centered service plans. This information was not described in the state’s original submission to CMS, as the private-pay individuals receiving services at the setting are not required to have person-centered service plans. The state follows up with the setting on October 1, 2019 and based on a review of person-centered plans and/or beneficiary interviews, determines that those regulatory requirements are being met and person-centered plans were in place on the day the setting began providing services to Medicaid beneficiaries. The state submits an attestation to that effect to CMS on October 15, 2019. In that instance, FFP would be available for expenditures for HCBS provided on or after August 1, 2019.
  • Example 3: In the same scenario described in Example 2, if the state finds that those person-centered planning regulatory requirements are not being met, the setting would be required to implement remediation to comply with those provisions. In this example, the state verifies that the setting completes needed remediation on November 15, 2019 and provides an attestation to CMS on December 1 that the remediation has occurred. FFP would be available for expenditures for HCBS provided by the setting on or after November 15, 2019.

RAD for PRAC Implementation Guidance Delayed

The release of guidance implementing Rental Assistance Demonstration (RAD) for PRAC, expected earlier this spring or summer, is still delayed and may not be issued until early fall.

As soon as the guidance is issued, we will disseminate information detailing where members can find the new RAD notice.

In the meantime, HUD has released state-by-state RAD Fact Sheetsthat demonstrate how the program helps preserve affordable housing. These interactive fact sheets provide information on RAD activity in each state, including how many projects and units have been closed as well as an estimate of how many people have been helped.

HUD notes that these fact sheets are updated in real time as RAD transactions close. More info at:


CMS Updates Recently Revised Appendix Q

The Centers for Medicare & Medicaid Services (CMS) has issued additional updates to the State Operations Manual Appendix Q, including guidance to surveyors on citing immediate jeopardy. 

This time around, changes include the addition of one small, very significant paragraph: Surveyors are reminded that criminal acts must be reported to local law enforcement. Related to noncompliance and noncompliance cited at the level of immediate jeopardy, surveyors are advised that if the entity refuses to report or if the surveyor cannot verify that a report was made, the surveyor must consult with his/her supervisor and must report potential criminal incident to local law enforcement immediately.

An updated Appendix Q is included in the memo.


Checking In on PDPM: Checklists, Milestones and Outcomes

It’s happening in less than 60 days. The new Patient Driven Payment Model (PDPM) goes into effect on October 1. Are you prepared for this major change in how you document and are reimbursed for care? 

A recent blog post by PointRight in McKnight’s Long-Term Care News provides key milestones that you should have achieved by now, as well as the essential things you should between now and October 1 and a few questions to ask six months and one-year post-implementation to help you assess whether you are meeting your goals.

To read more, see PDPM: Where providers should be now, on October 1 and at 6 and 12 months post implementation.There will be a session covering PDPM at our Fall Leadership Conference on September 11 with the latest update on PDPM and how to get ready for the changes that will be launching October 1.  Be sure to register by Friday, August 16 to receive the lowest registration rate possible!


Change from KEPRO to Livanta Requires Action by Medicare Providers

Livanta replaced KEPRO as the Beneficiary and Family Centered Care (BFCC) Quality Improvement Organization (QIO) for Iowa effective June 8, 2019. The purpose of the BFCC-QIO is to conduct quality of care reviews, beneficiary complaint reviews, and discharge and termination of service appeals in various Medicare provider settings. Livanta requires a Memorandum of Agreement (MOA) from providers.  To complete a new MOA and read frequently asked questions (FAQs), click here.

Skilled nursing facilities need to act in relation to the transition to Livanta, and may experience questions from surveyors relating to the transition, and as a reminder, Federal regulations at F575 require facilities to post a list of names and contact information for various state agencies and advocacy groups to include the BFCC-QIO.

Update Your Appeals Notices: Post-acute providers must update the Notice of Medicare Non-coverage with Livanta’s phone number for Iowa’s region. See the table on this Livanta webpage for phone numbers (also listed below).  If your facility uses pre-printed notices, please note that it is acceptable to use labels to cover the existing BFCC-QIO information on the appeals notices. The typeface must be clear, bold and 12 point or larger.  You may also hand-write over pre-printed notices, although this is not preferred.

Update Your Bill of Rights Forms:  Residents admitted on or after June 8, 2019, should receive a copy of the Bill of Rights (BOR) that includes the Livanta contact information, rather than the KEPRO contact information.  As shown below, the BOR should list Livanta rather than KEPRO:

Medicare Beneficiary and Family Centered Care Quality Improvement Organization

Livanta BFCC-QIO Program
 9090 Junction Drive, Suite 10
 Annapolis Junction, MD 20701

Phone: 1-888-755-5580
 Fax: 1-833-868-4061

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